Global Gains from Reduction of Trade Costs

Lai, Edwin L.-C.; Fan, Haichao; Qi, Han

doi:10.2139/ssrn.2201360

Cited by 2 publications

(1 citation statement)

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“… Various papers measure the first‐order impact of changes in bilateral trade costs on world welfare (Atkeson and Burstein () Burstein and Cravino (), Lai, Fan, and Qi (), Allen, Arkolakis, and Takahashi ()) or in trade costs in specific links of a transport network on country‐level welfare (Allen and Arkolakis ()) around an observed equilibrium. The right‐hand side of () could be used for a similar purpose, given a specific set of changes in trade costs. …”

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confidence: 99%

Optimal Transport Networks in Spatial Equilibrium

Fajgelbaum

Schaal

2020

ECTA

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We study optimal transport networks in spatial equilibrium. We develop a framework consisting of a neoclassical trade model with labor mobility in which locations are arranged on a graph. Goods must be shipped through linked locations, and transport costs depend on congestion and on the infrastructure in each link, giving rise to an optimal transport problem in general equilibrium. The optimal transport network is the solution to a social planner's problem of building infrastructure in each link. We provide conditions such that this problem is globally convex, guaranteeing its numerical tractability. We also study cases with increasing returns to transport technologies in which global convexity fails. We apply the framework to assess optimal investments and inefficiencies in the road networks of European countries.

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confidence: 99%

Optimal Transport Networks in Spatial Equilibrium

Fajgelbaum

Schaal

2020

ECTA

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Trade Theory with Numbers: Quantifying the Consequences of Globalization

2013

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We review a recent body of theoretical work that aims to put numbers on the consequences of globalization. A unifying theme of our survey is methodological. We rely on gravity models and demonstrate how they can be used for counterfactual analysis. We highlight how various economic considerations-market structure, firm-level heterogeneity, multiple sectors, intermediate goods, and multiple factors of production-affect the magnitude of the gains from trade liberalization. We conclude by discussing a number of outstanding issues in the literature as well as alternative approaches for quantifying the consequences of globalization.

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Global Gains from Reduction of Trade Costs

Cited by 2 publications

References 43 publications

Optimal Transport Networks in Spatial Equilibrium

Optimal Transport Networks in Spatial Equilibrium

Trade Theory with Numbers: Quantifying the Consequences of Globalization

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