The Organization of International Trade
Dominik Boddin and
Frank Stähler ()
No 7378, CESifo Working Paper Series from CESifo
This paper discusses how international trade is organized from export to trans-boundary transport to import. All evidence suggests that the transport sector is independent, may exercise market power and features strong economies of scale. We develop a model of a transport industry that operates under imperfect competition and economies of scale and two generic trade models in which export and import activities are either organized at arm’s length or in a vertical partnership. Using a large dataset of maritime transport costs, tariffs and export prices, we test the model predictions and find that economies of scale beat market power: a decline in the tariff implies a decline in freight rates. Furthermore, our results are consistent only with international trade being organized in vertical partnerships because a tariff increase does not lead to a decrease in export prices.
Keywords: trade costs; transport costs; export prices; vertical integration (search for similar items in EconPapers)
JEL-codes: F12 F14 R40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-geo, nep-int and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_7378
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