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Cabotage Sabotage? The Curious Case of the Jones Act

William Olney

No 2019-6, Working Papers from University of Hawaii Economic Research Organization, University of Hawaii at Manoa

Abstract: This paper examines the economic implications of the Jones Act, which is a 1920 U.S. cabotage law that restricts domestic waterborne shipments to American vessels. The rapid rise of the Asian shipbuilding industry over the last century has contributed to the closure of most American shipyards and to the decline in American built ships. Thus, the Jones Act requirements have become more onerous over time. The results show that the decline in Jones-Act-eligible vessels, instrumented for using shipbuilding in another high-income country, has reduced domestic waterborne shipments into U.S. states relative to other modes of transport and relative to waterborne imports. These findings are stronger in coastal states and for commodities that are typically transported via water. Furthermore, there is evidence that this reduction in domestic trade, due to the Jones Act, has increased consumer prices. These findings support common, but to date unverified, claims that the Jones Act impedes domestic trade and drives up prices.

Keywords: Cabotage; Jones Act; Shipping; Domestic Trade; Prices; Trade Policy (search for similar items in EconPapers)
JEL-codes: F14 F68 R48 (search for similar items in EconPapers)
Pages: 52 pages
Date: 2019-09
New Economics Papers: this item is included in nep-his, nep-int and nep-sea
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https://uhero.hawaii.edu/wp-content/uploads/2019/09/UHEROwp1906.pdf First version, 2019 (application/pdf)

Related works:
Working Paper: Cabotage Sabotage? The Curious Case of the Jones Act (2020) Downloads
Working Paper: Cabotage Sabotage? The Curious Case of the Jones Act (2019) Downloads
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