Container ships travel between a fixed set of origins and destinations in round trips, inducing a negative correlation in their freight rates. I study the implications of this round trip effect on international trade and trade policy. I identify this effect and develop an instrument using it to estimate the impact of transport costs on trade. I simulate counterfactual import tariff increases in a quantitative model and quantify the importance of endogenizing transport costs with respect to this effect: an exogenous transport costs model predicts a trade balance improvement from protectionist policies, while the round trip model finds the opposite. (JEL D22, F13, F14, L92, R41)

Entrepôts are hubs that facilitate trade between multiple origins and destinations. We study these entrepôts, the network they form, and their impact on international trade. We document that the trade network is a hub-and-spoke system, where 80% of trade is shipped indirectly-nearly all via entrepôts. We estimate indirect-shipping consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate economies of scale in shipping. Counterfactual infrastructure improvements at entrepôts have on average ten times the global welfare impact of improvements at non-entrepôts.

No abstract

In a three‐country model of endogenous trade agreements, we study the implications of the most‐favoured‐nation (MFN) clause when countries are free to form discriminatory preferential trade agreements (PTAs). Under current rules of the World Trade Organization (WTO), although non‐member countries face discrimination at the hands of PTA members, they themselves are obligated to abide by MFN and treat PTA members in a non‐discriminatory fashion. The non‐discrimination constraint of MFN reduces the potency of a country's optimal tariffs and therefore its incentive for unilaterally opting out of trade liberalization. Thus, MFN can act as a catalyst for trade liberalization. However, when PTAs take the form of customs unions, the efficiency case for MFN as well as its pro‐liberalization effect is weaker because one country finds itself deliberately excluded by the other two as opposed to staying out voluntarily.

Entrepôts are hubs that facilitate trade between multiple origins and destinations. We study these entrepôts, the network they form, and their impact on international trade. We document that the trade network is a hub-and-spoke system, where 80% of trade is shipped indirectly-nearly all via entrepôts. We estimate indirect-shipping consistent trade costs using a model where shipments can be sent indirectly through an endogenous transport network and develop a geography-based instrument to estimate economies of scale in shipping. Counterfactual infrastructure improvements at entrepôts have on average ten times the global welfare impact of improvements at non-entrepôts.