NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Theodore Papageorgiou

Department of Economics
Boston College
343 Maloney Hall
140 Commonwealth Ave
Chestnut Hill, MA 02467

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Institutional Affiliation: Boston College

NBER Working Papers and Publications

July 2017Geography, Search Frictions and Endogenous Trade Costs
with Giulia Brancaccio, Myrto Kalouptsidi: w23581
In this paper we study the role of the transportation sector in world trade. We build a spatial model that centers on the interaction of the market for (oceanic) transportation services and the market for world trade in goods. The model delivers equilibrium trade flows, as well as equilibrium trade costs (shipping prices). Using detailed data on vessel movements and shipping prices, we document novel facts about shipping patterns; we then flexibly estimate our model. We use this setup to demonstrate that the transportation sector (i) implies that net exporters (importers) face higher (lower) trade costs leading to misallocation of productive activities across countries; (ii) creates network effects in trade costs; and (iii) dampens the impact of shocks on trade flows. These three mechanism...
 
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