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Backfiring with backhaul problems

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  • Ishikawa, Jota
  • Tarui, Nori

Abstract

Trade barriers due to transport costs are as large as those due to tariffs. This paper incorporates the transport sector into a standard model of international trade and studies the effects of trade and industrial policies. Transport firms need to commit to a shipping capacity sufficient for a round trip, with a possible imbalance of shipping volumes in two directions. This imbalance is known as the “backhaul problem.” As transport firms attempt to avoid this problem, a tariff in one sector may affect other independent import and/or export sectors. In particular, domestic tariffs may backfire: domestic exports may also decrease, harming domestic export sectors and the domestic economy. This finding contributes to the literature on how import liberalization may generate a positive effect on the liberalizing country's exports by identifying a new channel through endogenous changes in transport costs given the backhaul problem.

Suggested Citation

  • Ishikawa, Jota & Tarui, Nori, 2018. "Backfiring with backhaul problems," Journal of International Economics, Elsevier, vol. 111(C), pages 81-98.
    • Handle: RePEc:eee:inecon:v:111:y:2018:i:c:p:81-98
    DOI: 10.1016/j.jinteco.2017.12.004
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    Cited by:

    1. Kazuhiro Takauchi & Tomomichi Mizuno, 2022. "Endogenous transport price, R&D spillovers, and trade," The World Economy, Wiley Blackwell, vol. 45(5), pages 1477-1500, May.
    2. Lutz Kilian & Nikos Nomikos & Xiaoqing Zhou, 2023. "Container Trade and the U.S. Recovery," International Journal of Central Banking, International Journal of Central Banking, vol. 19(1), pages 417-450, March.
    3. John Gilbert & Onur A. Koska & Reza Oladi, 2020. "Product Quality and Strategic Asymmetry in International Trade," Working Papers in Economics 20/05, University of Canterbury, Department of Economics and Finance.
    4. Cheng Haitao & Kato Hayato & Obashi Ayako, 2021. "Is Environmental Tax Harmonization Desirable in Global Value Chains?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 21(1), pages 379-416, January.
    5. Kazuhiro Takauchi & Tomomichi Mizuno, 2019. "Is competition in the transport industry bad?A welfare analysis of R&D with inter-regional transportation," Discussion Papers 1910, Graduate School of Economics, Kobe University.
    6. Hayakawa, Kazunobu & Ishikawa, Jota & Tarui, Nori, 2020. "What goes around comes around: Export-enhancing effects of import-tariff reductions," Journal of International Economics, Elsevier, vol. 126(C).
    7. HIGASHIDA Keisaku & ISHIKAWA Jota & TARUI Nori, 2021. "Carrying Carbon? Negative and Positive Carbon Leakage with International Transport," Discussion papers 21102, Research Institute of Economy, Trade and Industry (RIETI).
    8. Dominik Boddin & Frank Stähler, 2018. "The Organization of International Trade," CESifo Working Paper Series 7378, CESifo.
    9. John Gilbert & Onur A. Koska & Reza Oladi, 2022. "International trade, differentiated goods, and strategic asymmetry," Southern Economic Journal, John Wiley & Sons, vol. 88(3), pages 1178-1198, January.
    10. Jungho Lee & Shang-Jin Wei & Jianhuan Xu, 2020. "The Welfare Cost of a Current Account Imbalance: A "Clean" Effect," NBER Working Papers 27276, National Bureau of Economic Research, Inc.
    11. Zheng, Han & Fujii, Daisuke, 2021. "Nonlinear Pricing in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-112, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    12. Yuan, Hang & Wang, Kun & Yang, Hangjun, 2022. "Rail's efficiency gain by separating affiliated businesses and its impact on product mix of export by rail," Transport Policy, Elsevier, vol. 115(C), pages 126-140.
    13. Kanehara, Daishoku & Kamei, Keita, 2019. "Transport Price, Product Differentiation and R&D in an Oligopoly," MPRA Paper 93148, University Library of Munich, Germany.
    14. Wei, Shang-Jin & Lee, Jungho & Xu, Jianhuan, 2021. "The Welfare Cost of a Current Account Imbalance: A 'Clean' Channel," CEPR Discussion Papers 15805, C.E.P.R. Discussion Papers.
    15. Zheng, Han, 2022. "Price Discrimination in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-123, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    16. Feng, Xiao & Wang, Yongjin & Zhao, Laixun, 2022. "Export capacity constraints and distortions," Journal of Development Economics, Elsevier, vol. 157(C).
    17. Zheng, Han, 2021. "Price Discrimination in the Transport Industry and the Gains from Trade," Discussion paper series HIAS-E-113, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    18. Asturias, Jose, 2020. "Endogenous transportation costs," European Economic Review, Elsevier, vol. 123(C).
    19. Charlotte Emlinger & Amélie Guillin, "undated". "Cheaper and Faster: The Role of Air Services Agreements on Transportation," Working Papers 2023-17, CEPII research center.
    20. Ishikawa, Jota & Tarui, Nori, 2021. "You can’t always get what you want: Protectionist policies with the transport sector," Economics Letters, Elsevier, vol. 207(C).
    21. Ardelean, Adina & Lugovskyy, Volodymyr, 2023. "It Pays to be big: Price discrimination in maritime shipping," European Economic Review, Elsevier, vol. 153(C).

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    More about this item

    Keywords

    Transport sector; Transport cost; Backhaul problems; International shipping; Tariffs;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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