Department of Economics
464 Uris Hall
Ithaca, NY 14850
NBER Program Affiliations:
NBER Affiliation: Faculty Research Fellow
Institutional Affiliation: Cornell University
NBER Working Papers and Publications
|June 2020||Search Frictions and Efficiency in Decentralized Transportation Markets|
with , , : w27300
In this paper we explore efficiency and optimal policy in decentralized transportation markets that suffer from search frictions, such as taxicabs, trucks and bulk shipping. We illustrate the impact of two externalities: the well-known thin/thick market externalities and what we call pooling externalities. We characterize analytically the conditions for efficiency, show how they translate into efficient pricing rules, as well as derive the optimal taxes for the case where the planner is not able to set prices. We use our theoretical results to explore welfare loss and optimal policy in dry bulk shipping. We find that the constrained efficient allocation achieves 6% welfare gains, while the first-best allocation corresponding to the frictionless world, achieves 14% welfare gains. This sugge...
|July 2017||Geography, Search Frictions and Endogenous Trade Costs|
with , : 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...