Proxy For Transport Costs Research Articles

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.

Globalization and export flows between Eurasian Economic Union countries: a gravity model approach

In the empirical tools for the research of trade integration a special place is occupied by gravity models, insofar as these models have rather high accuracy in explaining mutual trade flows. Recently, however, the gravity model approach has been subjected to critical rethinking: globalization brought considerable changes not only in economic growth, but also in international trade, what allowed speaking about a “Death of Distance”. At the same time, estimates based on gravity models almost always demonstrated an increase in the coefficient of distance as a proxy for transport costs, which contradicts the general perception of the phenomenon of globalization. The paper is devoted to testing the validity of inclusion of the globalization index in the model, which would allow consider the role of globalization in bilateral cross-country trade, as well as testing the hypothesis of reducing the coefficient of distance. Based on the annual panel data over the period 2000-2016 the trade integration model for the EEU countries was estimated. To test the hypothesis of a decrease in the estimated coefficient of distance over time, the gravity model was also evaluated at different time intervals. And the positive impact of the globalization factor on the volume of exports is revealed.

Manufacturing (co)agglomeration in a transition country: Evidence from Russia

AbstractWe document the geographic concentration patterns of Russian manufacturing using detailed microgeographic data. About 80% of three‐digit industries are significantly agglomerated, and a similar share of three‐digit industry pairs is significantly coagglomerated. Industry pairs with stronger buyer–supplier links—as measured using Russian input–output tables—tend to be slightly more coagglomerated. This result is robust to instrumental variable estimation using either Canadian or US instruments. Using Canadian ad valorem transport costs as a proxy for transport costs in Russia, we further find that industries with higher transport costs are more dispersed, and industry pairs with higher transport costs are less coagglomerated.

The Effects of the Interstate Commerce Act on Transport Costs: Evidence from Wheat Prices

There is significant debate over the effect of the Interstate Commerce Act (ICA) on the cost of rail transport to shippers. Taking price differences across locations as proxy for transport costs, we use data on wheat prices before and after the implementation of the ICA to see if the Act led to smaller differences in wheat prices across American cities relative to a control group of European cities. We find that the ICA had no effect on US transport costs; however, it reduced their volatility substantially. This evidence supports the view that the ICA helped stabilize cartel prices after a period of significant price wars.

Markets and Networks in International Trade: On the Role of Distances in Globalization

The enduring importance of geographic distance as an impediment to international trade has recently become recognized as an empirical fact in need of explanation. According to one line of argument—the ‘network view’—the continuing high sensitivity of international trade to geographical distance is associated with a shift in the composition of trade towards goods requiring more extensive information exchange and personal interaction between buyers and sellers. An alternative explanation—‘the market view’—contends that improved availability of information and increasing transparency of markets have facilitated the matching of geographically more proximate buyers and sellers, and that the observed decline in average transportation distances is a reflection of increasingly efficient markets. This paper examines empirically the merits of these two arguments based on a longitudinal analysis of bilateral trade between 25 major trading nations for the period 1962–2008. It compares the development of the relative importance of ‘psychic distance’—a proxy for information related transaction costs—and geographic distance—a proxy for transportation costs—in three categories of goods. The results are broadly in support of the ‘market-view’, showing that the sensitivity of trade to psychic distance has declined dramatically for all categories of goods. The impact of geographic distance has increased markedly for homogenous goods, whereas for more differentiated goods it has decreased mildly.

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.

Distance, production, and trade

This paper investigates the relationship between geographical distance and both the extent of trade and foreign production. Industries engaged in exporting and co-production activities across national boundaries are identified through their use of the Offshore Assembly Provisions in the US tariff code. Findings counter conventional wisdom. Trade and foreign production activities are found to drop off rapidly over the first third of the distance scale, rise over the middle portion, reach a peak in the final third, and decline thereafter. This pattern suggests frictions associated with distance can be offset by government policies and other country attributes. Management control, information and communications costs, and the ability to implement just-in-time delivery strategies may not be as distance sensitive as previously thought. Theorists should re-evaluate the role of distance in trade models and refrain from using distance as a proxy for transport costs.

Global Linkages of Subnational Regions: Coastal Exports and International Networks

This article explores the determinants of exports of the two coastal regions of the continental United States and the differences between them. The authors evaluate the contribution of international sociocultural and business networks to exports of the two major coastal regions of the United States, the West Coast and the East Coast, and examine their geographic trading affinities. The article finds that although transnational business ties play a significant positive role in boosting overall exports of both coasts, social networks of foreign‐born immigrants play a similar role only for the West Coast. The study also suggests that the significance of distance as a proxy for transportation costs is somewhat diminished once these networks are taken into account. Both regions seem to share a propensity for exports to the Asia‐Pacific region. (JEL R0, F10, F20)

Proximate causes of land-use change in Narok District, Kenya: a spatial statistical model

This study attempts to identify how much understanding of the driving forces of land-use changes can be gained through a spatial, statistical analysis. Hereto, spatial, statistical models of the proximate causes of different processes of land-use change in the Mara Ecosystem (Kenya) were developed, taking into account the spatial variability of the land-use change processes. The descriptive spatial models developed here suggest some important factors driving the land-use changes that can be related to some well-established theoretical frameworks. The explanatory variables of the spatial model of mechanised agriculture suggest a von Thünen-like model, where conversion to agriculture is controlled by the distance to the market, as a proxy for transportation costs, and agro-climatic potential. Expansion of smallholder agriculture and settlements is also controlled by land rent, defined, in this case, by proximity to permanent water, land suitability, location near a tourism market, and vicinity to villages to gain access to social services (e.g. health clinics, schools, local markets). This difference in perception of land rent reflects the widely different social and economic activities and objectives of smallholders versus the large entrepreneurs involved in mechanised farming. Spatial heterogeneity as well as the variability in time of land-use change processes affect our ability to use regression models for wide ranging extrapolations. The models allow evaluating the impact of changes in driving forces that are well represented by proximate causes of land-use change.

Price and seller concentration in cement: effective oligopoly or misspecified transportation cost?

A positive correlation between price and seller concentration in cement markets disappears if a different proxy for transportation costs, population density, is included in the specification.

Bilateral Trade Flows and Transport Costs

T HIS study examines the direction and level of aggregate bilateral flows in a multi-country network. We are not so much concerned with an explanation of a country's total imports as with the geographical pattern of its imports from among its trading partners. We therefore incorporate economic variables for both the importing and exporting countries, including demand and supply conditions and trade resistance factors, in particular, the costs of transportation. The latter are incorporated into the analysis through an errorsin-variables specification. Our study begins on familiar ground. Similar models have been proposed and tested by Tinbergen (1962), Poyhonen (1963a, b), Pulliainen (1963), Linnemann (1966) and others. The key difference between our study and previous ones lies in the treatment of the costs of transportation. Previous studies have used distance as a proxy for transport costs, but that has some serious limitations. First, the cost of transportation is influenced by other factors such as the value of the commodity being transported.1 For example, Moneta (1959) has pointed out that the effect of distance is small for high-valued commodities. Second, the use of distance imposes the assumption that the cost of transportation is the same in either direction between any pair of trading countries. This is restrictive when analyzing aggregate flows, since the commodity composition of differs by direction. Third, estimated relationships (e.g., elasticities) between flows and static variables such as distance are not very helpful in predicting future levels and thus are not very helpful in policy analysis. Finger and Yeats (1976) have shown for the United States that effective protection due to international transport costs is at least as high as tllat due to tariffs. Moreover, they indicate that the importance of transport costs has been increasing rapidly in recent years (even before full consideration of the recent petroleum price increases).2 The need to move beyond the distance specification of transport costs is clear. The fact that reliable data on transport costs are unavailable has been the primary reason for the use of distance as a proxy in the previous studies. In principle, the difference between c.i.f. and f.o.b. values represents the costs of freight and insurance.3 However, due to notorious measurement errors, these figures cannot be used in traditional econometric procedures. Consequently, most studies dealing with this subject have not utilized the differences between c.i.f. and f.o.b. values.4 Though these differences are indeed highly inaccurate measures of transport costs, they are included in our empirical analysis by applying an errorsin-variables approach. This allows the estimation of the elasticity of bilateral flows with respect to transport costs, which is the key product of this study. The theoretical background is introduced in section II and the empirical model is specified

A Note on John Kain's "Housing Segregation, Negro Employment, and Metropolitan Decentralization"

The purpose of this note is (1) to criticize Kain's methodology with regard to testing hypotheses (2) and (3), and (2) to present alternative results that conflict with hypothesis (2). Kain's data are for geographic areas in Detroit (1957) and Chicago (1956), with ninety-eight observations for each city. With these data he runs regressions using the Negro percentage of total employment in the area as the dependent variable w. The independent variables are R, the Negro percentage of (employed) residents in the areaused as a proxy for employers' propensity to discriminate, and d, the airline distance from the area to either the nearest Negro residence area (more than 2 percent Negro) or to the nearest point in the Negro ghettowith this variable used as a proxy for transportation costs and effects of such costs on job information. The regression coefficients have the expected signs and are statistically significant. Over 75 percent of the total variance is explained for Chicago, and over 35 percent for Detroit. Kain estimates the effect of housing segregation on the level of black employment by assuming that with no housing segregation the proportion of Negro workers would be the same mR for each geographical area. Consequently, for each area R=mR and d=0. Substituting these values into the regression equation (1) (1) w==aR+bd+c,