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You can’t always get what you want: Protectionist policies with the transport sector

Jota Ishikawa and Nori Tarui

Economics Letters, 2021, vol. 207, issue C

Abstract: This paper incorporates key stylized facts about the transport sector into the conventional international oligopoly model and explores how protectionist policies perform differently when transport costs are endogenous and subject to the backhaul problem (i.e., the imbalance of shipping volume in outgoing and incoming routes). A country’s protectionist policies, which benefit domestic firms and harm foreign firms in the conventional model, can harm domestic firms and benefit foreign firms if carriers avoid the backhaul problem. Protectionist policies may also lead to a facilitating practice. In the absence of the backhaul problem, both domestic and foreign consumers lose from protectionist policies.

Keywords: International oligopoly; Import tariffs and quotas; Transportation; Backhaul problem; Facilitating practice; Profit shifting (search for similar items in EconPapers)
JEL-codes: F12 F23 L13 R40 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.econlet.2021.110009

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