Backfiring with backhaul problems

Jota Ishikawa and Nori Tarui

Journal of International Economics, 2018, vol. 111, issue C, 81-98

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.

Keywords: Transport sector; Transport cost; Backhaul problems; International shipping; Tariffs (search for similar items in EconPapers)
JEL-codes: F12 F13 R40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:111:y:2018:i:c:p:81-98

DOI: 10.1016/j.jinteco.2017.12.004

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