Transport efficiency, downstream R&D, and spillovers

Takauchi, Kazuhiro (2015): Transport efficiency, downstream R&D, and spillovers.

Abstract

This study examines the effects of higher transport efficiency on cost-reducing R&D investment and welfare in a two-way duopoly trade model with an imperfectly competitive transport sector. We show that, corresponding to the degree of the R&D spillover, higher transport efficiency can affect investment in a U-shaped fashion. We also show that higher transport efficiency can reduce total output and consumer surplus. By comparing the two cases of firm-specific carriers and duopoly carriers, we demonstrate that total output in the case of duopoly carriers is lower than that in the case of firm-specific carriers if the spillover is sufficiently large. Higher transport efficiency and competition in the transport sector may harm consumers.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transport efficiency; Imperfectly competitive transport sector; Cost-reducing R&D; R&D spillover
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets

References

Abe, K., K. Hattori, and Y. Kawagoshi (2014) Trade liberalization and environmental regulation on international transportation. Japanese Economic Review, 65(4), 468-482.

Behrens, K., C. Gaigne, and J.-F. Thisse (2009) Industry location and welfare when transport costs are endogenous. Journal of Urban Economics, 65, 195-208.

Behrens, K. and P. M. Picard (2011) Transportation, freight rates, and economic geography. Journal of International Economics, 85, 280-291.

Brander, J. A. and P. R. Krugman (1983) A `reciprocal dumping' model of international trade. Journal of International Economics, 15(3), 313-321.

Broda, C. and D. E. Weinstein (2004) Globalization and the gains from variety. NBER Working Paper No. 10314.

D'Aspremont, C. and A. Jacquemin (1988) Cooperative and noncooperative R&D in duopoly with spillovers. American Economic Review, 78(5), 1133-1137.

Francois, J. F. and I. Wooton (2001) Trade in international transport services: the role of competition. Review of International Economics, 9(2), 249-261.

Ghosh, A. and J. Lim (2013) Cooperative and non-cooperative R&D and trade costs. Journal of International Trade and Economic Development, 22(6), 942-958.

Gurtzgen, N. (2002) Trade liberalization and union wages in a differentiated Bertrand duopoly. Open Economies Review, 13, 133-151.

Haaland, J. I. and H. J. Kind (2008) R&D policies, trade and process innovation. Journal of International Economics, 74, 170-187.

Hummels, D. (2007) Transportation costs and international trade in the second era of globalization. Journal of Economic Perspectives, 21(3), 131-154.

Ishikawa, J. and N. Tarui (2015) Backfiring with backhaul problem: Trade and industrial policies with endogenous transport costs. Discussion paper series HIAS-E-12, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.

Kamien, M. I., E. Muller, and I. Zang (1992) Research joint ventures and R&D cartels. American Economic Review, 82(5), 1293-1306.

Kuby, M. and N. Reid (1992) Technological change and the concentration of the U.S. general cargo port system: 1970-88. Economic Geography, 68(3), 272-289.

Levinson, M. (2006) The box: how the shipping container made the world smaller and the world economy bigger. Princeton, NJ: Princeton University Press.

Liu, Y. and A. Mukherjee (2013) The effects of trade liberalization in a vertical structure. Review of International Economics, 21(5), 966-973.

Long, N. V., H. Raff, and F. Stahler (2011) Innovation and trade with heterogeneous firms. Journal of International Economics, 84, 149-159.

Marjit, S. and A. Mukherjee (2015) Endogenous market structure, trade cost reduction, and welfare. Journal of Institutional and Theoretical Economics, 171, 493-511.

Matsushima, N. and K. Takauchi (2014) Port privatization in an international oligopoly. Transportation Research Part B: Methodological, 67, 382-397.

Morita, T. (2012) Cost-reducing R&D investment, labor market and trade. Review of International Economics, 20(4), 821-827.

Takauchi, K. (2015) Endogenous transport price and international R&D rivalry. Economic Modelling, 46, 36-43.

Talley, W. K. (2000) Ocean container shipping: impacts of a technological improvement. Journal of Economic Issues, 34(4), 933-948.