Entrepôt: Hubs, Scale, and Trade Costs

Sharat Ganapati, Woan Foong Wong and Oren Ziv

No 8199, CESifo Working Paper Series from CESifo

Abstract: We study the global trade network and quantify its trade and welfare impact. We document that the trade network is a hub-and-spoke system where 80% of trade is shipped indirectly, nearly all via entrepôts—major hubs that facilitate trade between many origins and destinations. We estimate indirect-shipping consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate scale economies in shipping. Network and scale effects in the trade network propagate local trade cost changes globally. Even when initial trade cost changes are not transportation-related, these endogenous channels alter the magnitude and distribution of welfare impacts, particularly for entrepôts. Counterfactual infrastructure improvements at entrepôts generate ten times the global welfare impact relative to non-entrepôts.

Keywords: trade costs; scale; hubs; transport costs; transportation networks; international trade; shipping (search for similar items in EconPapers)
JEL-codes: F10 F13 F14 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-int, nep-net, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp8199.pdf (application/pdf)

Related works:
Journal Article: Entrepôt: Hubs, Scale, and Trade Costs (2024)
Working Paper: Entrepôt: Hubs, Scale, and Trade Costs (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_8199

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().