Effects Of Transportation Costs Research Articles

The trade‐GDP ratio as a measure of openness

AbstractThe ratio of trade to GDP is often used as a summary measure of a country's openness to the rest of the world. It is well‐known that the trade–GDP ratio is affected by relatively time‐invariant factors, such as country size and remoteness from trading partners, that can largely be controlled for in cross‐country panels by using country fixed effects. It is shown here that there are also other important, time‐varying influences on the trade‐GDP ratio that have been little investigated, such as the prices of commodity exports and imports, the real effective exchange rate, and the ratio of investment to GDP. These factors are shown to be significant, and not only in the short run, and need to be taken into account in estimating the long‐run effects of transport costs or trade policy on the trade/GDP ratio.

International Trade and Multinational Investment Theory of the Firm

This study developed the international trade and multinational investment theory of a firm. It examined the effects of export taxes and transport costs in attracting foreign direct investment. The study answered the following question: when is it profitable for a multinational to locate one of its affiliates in a particular host country to trade in that market in lieu of exporting the product to that country after producing it in the home country? In this study, multinationals locate themselves in developing countries to compete in an oligopolistic market and the host countries compete to attract them. The model predicts: (a) a negative effect of transport costs on the number of multinationals entering developing countries, (b) a negative effect of export taxes on the number of multinationals entering developing countries, and (c) a negative effect on the interaction between transport costs and export taxes on the number of multinationals entering developing countries.

Estimation of efficiency and transportation cost as factors in cereal marketing in a typical rural Nigeria

Abstract. This study estimated the efficiency of cereal marketing and effect of transportation cost on gross receipts of traded grains in a typical rural Nigeria. A total of 120 cereal marketers were selected through a simple random method. A structured questionnaire was used for collection of data which was complemented by oral interview and group discussion for a period of one month (24th July – 23rd August 2019). Descriptive statistics, Marketing efficiency, and Multiple Regression were employed in making data analysis. Results indicated that most of the respondents were males (70.85%), married (66.67%) with a household size of 6-10 persons, and within the age range of 40-49 years (51.67%) with a larger proportion (41.67%) having had secondary education. The majority (54.17%) had cereal marketing as their main occupation and sourced business capital from personal savings. The most prioritized method of transportation among the marketers was the use of motor vehicles, and maize was ranked as the most traded staple among the respondents. Regression results revealed coefficients of 0.3758 and 0.5296 for transportation cost and miscellaneous services which were both significant at p<0.001 as the most influential variables to gross receipts of cereal marketing in the surveyed area. Further, the findings showed a marketing efficiency of 728.80%, implying a very highly efficient or profitable marketing system among the cereal marketers. The most notable challenges experienced were high transportation cost (83.33%), insecurity, inadequacy of capital among the marketers, and poor transportation facilities in descending order. Conclusively, it could be said that slightly enlightened married men who sourced capital from their personal savings dominated cereal marketing in typical rural Nigeria. And the cereal marketing was confirmed to be highly efficient in the area studied. It is, therefore strongly endorsed that agencies that intend to improve cereal marketing in the area under consideration and other rural communities in the country should address the challenges highlighted.

Volatility of relative prices and transportation costs: evidence for Brazilian cities

ABSTRACT This work estimates the effect of transport costs on relative price volatility in Brazilian cities. We use time-varying volatility measures and propose a new proxy for transportation costs. The results of the dynamic panel data models show (little) evidence of a positive impact of transport costs on relative price volatility, only in specifications without the relative wage volatility.

Evaluating the effect of intra-industry trade on the bilateral trade productivity for petroleum products of Iran

The rapid growth of energy consumption and the unequal distribution of energy resources have increased the concern for sustainable development in the face of deteriorating energy security. However, institutional arrangements associated with the energy market and market integration can improve the distribution of energy products and boost bilateral trade productivity in energy products. Furthermore, intra-industry trade (IIT) can increase the level of market integration among trading partners through expanding vertical relationships among them. Thus, the aim of this study is to evaluate the effect of IIT on bilateral trade productivity. Hence, this study tries to identify the determinants of bilateral trade flows of crude oil and petroleum products among Iran and its major partners using the Poisson pseudo-maximum-likelihood (PPML) method during 1997–2016. Then, the bilateral trade productivity of the selected products will be calculated using the Malmquist index. Finally, the effect of IIT on the bilateral trade productivity among Iran and its partners will be evaluated using panel data method. Based on the results, the gross domestic product (GDP) per capita, the difference of oil reserves, the access to sea, and the IIT have positive effects on the bilateral trade flows, while the effects of transportation costs and economic sanctions are negative. Also, the impact of IIT on the bilateral trade productivity is positive.

Regional Relative Price Disparities and Their Driving Forces

This paper studies the long-run behavior of relative price dispersion among cities in Korea with a special emphasis on heterogeneous transitional patterns of price level dynamics. Formal statistical tests indicate considerable evidence for rejecting the null of relative price level convergence among the majority of cities over the sample period of 1985-2015. The analysis of gravity model suggests that the effect of transportation costs on intercity price level differentials is limited, while other socioeconomic factors, such as income, input factor prices, demographic structure, and housing price growth, play key roles in accounting for persistent regional price level disparities. Individual price levels are found to be better explained by a multiple-component model, and the deviations from PPP may be attributed to distinct stochastic common trends that are characterized by income and demographic structure.

A study on transport costs and China’s Exports: An extended gravity model

This paper suggests an extending conventional gravity model design to empirically analyze the effect of transport costs and port efficiency on China’s export flows. It shows that factor endowment and transport costs variables affect export trade value in directions that New Trade Theory (NTT) predicted. Also, the evidence indicates that, controlling for the effects of transport costs on trade, variables in traditional gravity model are consistent with previous empirical studies in both magnitudes and directions. Moreover, more than 22% of the variation in Chinese export trade can be explained by those three variables alone. The findings reported in this paper empirically explains how seriously transport costs and port efficiency affect China’s export growth by comparing effects of labour production factor costs on external trade. It suggests that the improvement of port efficiency and reduction of road transport costs play a vital role in China’s export competitiveness in the global market.

Análisis del mercado de piña Gold y Perolera en dos principales centrales mayoristas de Colombia

En este trabajo se analizó el comportamiento del precio de dos variedades de piña Gold y Perolera en dos centrales mayoristas en Colombia. Las técnicas utilizadas fueron la de cointegración y la prueba de causalidad de Granger, para lo cual se tomaron los precios de la piña, en el periodo 2006-2011 de los mercados mayoristas de Corabastos (para el caso de Bogotá) y la Central Mayorista de Itagüí (para Medellín). El marco teórico fue la ley de precio único. El trabajo probó que existe integración de los mercados en el proceso de formación de precios. Los resultados permiten ver que existe independencia entre los precios de los dos mercados. Las pruebas de cointegración indican que las series sí están cointegradas, por lo que, en ausencia de choques externos, las series en el largo plazo convergen. Se concluye que, a pesar de que no existe causalidad entre los mercados, estos sí están integrados en el largo plazo, lo que evidencia un cumplimiento de la ley de precio único. El estudio no incluyó un análisis de las distancias entre las zonas de producción y los centros de consumo para considerar el efecto del costo del transporte al momento de fijar el precio. Una futura investigación podría considerar estas variables al igual que la calidad y las preferencias de los consumidores.

Development and trade competitiveness of the European wine sector: A gravity analysis of intra-EU flows

This study analyses the intra-EU trade of the world׳s chief wine exporters, namely Italy, France and Spain. Using an augmented version of the gravity model we empirically assess which of the three countries have experienced growth in intra-EU market trade. Effects of transportation costs, as well as demand and supply gaps between origin and destination countries, on the size of bilateral trade flows were specifically taken into account. Estimation results highlight the differences between bulk and bottled wine, providing useful information for European producers and policy-makers involved on regulation of wine sector. As concern bulk wine, Italy and Spain show no element of growth in competitiveness, while France shows a statistically significant annual decrease. In contrast, estimates for bottled wine all show a growth tendency, albeit with a different magnitude of coefficients. Italy is the country with the highest trend, followed by Spain and France which instead has a decidedly modest growth in export values. However, analysis of pricing policies shows that France does not appear to target an increase in export volumes so much as an increase in average unit price, while Italy, and especially Spain, have a tendency to increase export volumes, also to the detriment of prices.

Transport costs and China’s exports: Some empirical evidences

Based on a new panel data set covering exports of four Chinese port cities to 32 countries and Hong Kong over the period of 1997–2008, this paper extends the conventional gravity model to assess the impacts of transport costs and port efficiency on China’s exports. The results can be summarized as three main findings: (1) The improvements of port efficiency and reduction of road transport costs play a vital role in China’s export competitiveness in the global market. The coefficient estimates on them are relatively large, around 0.72 and −0.89, respectively; (2) The effect of transport costs and port efficiency on China-to-Asia exports significantly exceeds that on China-to-Europe and China-to-America exports; (3) The overall estimated elasticity of road, railroad and port measure is 1.66, which is almost three times that of the average wage of port cities. The empirical results provide strong evidences that upgrading China’s transport service networks should offer greater scope for maintaining and increasing its competitive edge in low cost productions. The findings offer some insights and priorities for government policy making.

The Effect of Transport Costs on Housing-related Financial Stress in Australia

Housing-related financial stress or housing stress is usually measured on the basis of income and direct housing costs such as mortgage repayments and rents. One cost that is not included in calculations of housing stress, but which may be important, is the difference made by transport costs. This paper shows how a measure of housing stress that incorporates transport costs can give a different picture of housing stress from a measure that ignores transport costs. The result shows that, in capital cities, bringing transport costs into a housing stress measure particularly affects households with children. It is also found that the impact of transport costs is even greater outside capital cities and that access to public transport may play a role in determining the spatial pattern of housing stress and hence the impact of transport cost on housing stress.

The Influence of Intellectual Property Rights on the International Trade of Advanced Technology Products

The gravity model of international trade is based on the assumption that trade between two countries will tend to be greater as barriers between those two economies become smaller. In the traditional application of the gravity model, the physical distance between two economies, a proxy for transportation costs, represents this barrier in a very physical sense. This paper utilizes the gravity model to evaluate trade flows among a specific subset of traded goods, that of advanced technology products. The overall production costs of ATP goods include expenditures from a substantial amount of research and development, which means that transportation costs tend to represent a smaller portion of the overall production costs. Therefore, in the context of the gravity model, for ATP, the “barrier” effect of transportation costs is hypothesized to be weaker than for overall trade flows. Additionally, due to large investments in research and development of advanced technology products, low levels of intellectual property protection may serve to discourage firms from trading with countries that have comparatively loose enforcement of intellectual property protection regulations. This paper compares the application of the gravity model to exports of ATP and overall exports from the United States. The gravity model is applied to both overall US exports and US exports of ATP for the years 2007 to 2011. The gravity model is further applied to 2011 US exports of 10 ATP subcategories. Through these two approaches, this paper assesses the varying influence of transportation costs and intellectual property protections on the trade on of advanced technology products. Results indicate that higher levels of intellectual property protections in an economy are associated with greater imports of ATP from the United States, and that responsiveness to fluctuations in levels of IPR enforcement is not uniform among all categories of ATP.

Immigration and Trade

This paper investigates the relationship between intra-industry trade (IIT), horizontal IIT, vertical IIT (VIIT) and immigration flows using a gravity model for the period 1995-2008 amongst Portugal and European Union’s Member States (EU-27). Using a panel data approach, the results show a positive correlation between immigration and IIT. These outcomes indicate that the immigration can reduce transaction costs between home and host country. We also consider the economic dimension which appears to exercise a positive effect on trade. Our research confirms the hypothesis that there is a negative effect of transportation costs on trade.

Regional employment and wages. The effects of transport costs and market potential. An application for Argentina

Economic activity in Argentina shows a high degree of concentration, in 1993 almost 46% of GDP was generated in an area representing just 0.14% of the country. When looking at the manufacturing sector the concentration is still higher. The new economic geography models developed since the early nineties explain the location of economic activity across regions as the result of two opposite forces, centripetal and centrifugal. As trade costs are reduced, the relative strength of these two forces changes, such that we might also expect changes in the regional structure of production and wages. How trade liberalising policies might have affected the structure of production and wages across regions is the topic we try to make a contribution. The evidence points out that the further reduction of trade barriers during the nineties might have had a small effect on the regional structure of employment and wages across counties, at least in the short-run.

Longitudinal Analysis on Inter-regional Information Interaction

We modified the inter-regional business interaction model proposed in our previous paper, which considers substitutability and complementarity between face to face communication and telecommunication, and applied the model to longitudinal inter-regional interaction data. In 1990's, the telecommunication cost was remarkably reduced to 1/2 to 1/5 levels, but the telephone traffics did not increase accordingly. We clarified that the effect oftransportation cost, inter-regional business administrative relation are stable on the inter-regional interaction in different time points. Centralities of both cities became insignificant for the interaction, and it may result the stable trend of the telephone traffics.

Transportation costs and the residential location decision: A new approach

This paper presents an alternative general procedure for studying the effects of transportation costs (work and nonwork related) on the household location decision. The aim is to provide a framework for determining which costs are properly included in full housing cost and which are not. The procedure is based upon the characteristics of the solution set of the Lancastrian consumer demand problem.

The Composition of Trade within Import-restricted Product Categories

Quantitative restrictions imposed on product categories have been observed to shift the composition of imports with these categories in favor of relatively more expensive items. This paper applies Alchian and Allen's proposition concerning the effects of transportation costs on the composition of demand to explain this phenomenon. It is also shown that the same effects occur under specific tariffs but do not pertain to ad valorem tariffs or value restrictions.

The effects of transportation costs in low‐income agricultural economies

This paper examines the static consequences of transport costs in low‐income agricultural economies, and argues that many phenomena common to such economies may be largely due to the costs of transportation. It is argued below that the coexistence of ‘modern’, intensive capital‐using farms and others using primitive, extensive farming methods and very little capital can be a response to transport costs. It also seems possible that a sizeable fraction of the frequently observed urban‐rural wage gap may be a transport‐related index number phenomenon rather than a true gap in real wages.

A Note on the Partitioning of a Single Product Market into Territories of Outlets

Distribution of a good or a service is an essential activity of every business. Distribution means transportation of goods from their source, the manufacturing plant or the warehouse, to their destination, the customer. In this article we are interested in the effect of transportation costs on the size and shape of the area that any particular outlet serves. Several outlets offer the same product to a customer at some given location. We assume that, for a given outlet, price is a function of the distance between outlet and customer, and the customer accepts the offer with the lowest price. First, the concept is illustrated by determining the territories of two outlets with linear cost functions. Then the results are generalized for n outlets and arbitrary monotonic cost functions. Possible applications of the results are outlined.

The London Milk Trade, 1860-1900

he history of the liquid milk trade in the fifty years before the First World War is an interesting example of the effect of transport costs upon the structure of an industry handling a bulky and highly perishable commodity. The trade grew in these years both in importance and in complexity, as a result, firstly, of the growing demand from urban consumers for liquid milk, and secondly, of the steadily increasing size of London. As bricks and paving stones covered more of the grazing grounds of Middlesex and Surrey, more milk had to be transported over longer distances; problems of deterioration in transit became worse; more intermediaries were required; each additional function added to the markets in which prices reflected the strength of competition or the power of monopoly elements. A further complication in this period was the growing public concern over the quality of the milk supplied. To discourage adulteration was the object of the first legislation dealing with milk; as 'the germ theory' of disease became generally accepted, public health authorities sought, with varying degrees of enthusiasm, to enforce minimum standards of cleanliness and hygiene in cowsheds, dairies and milk-shops.