The trade reducing effects of market power in international shipping

Developing countries pay substantially higher transportation costs than developed nations, which leads to less trade and perhaps lower incomes. This paper investigates price discrimination in the shipping industry and the role it plays in determining transportation costs. In the presence of market power, shipping prices depend on the demand characteristics of goods being traded. We show theoretically and estimate empirically that ocean cargo carriers charge higher prices when transporting goods with higher product prices, lower import demand elasticities, and higher tariffs, and when facing fewer competitors on a trade route. These characteristics explain more variation in shipping prices than do conventional proxies such as distance, and significantly contribute to the higher shipping prices facing the developing world. A simple back of the envelope calculation suggests that eliminating market power in shipping would boost trade volumes by 5.9% (for the US) to 15.2% (for Latin America). Our findings are also important for evaluating the impact of tariff liberalization. Cargo carriers decrease shipping prices by 1–2% for every 1% reduction in tariffs.     

Domestic productivity and variety gains from trade

We show theoretically and confirm empirically that domestic productivity has a significant impact on the demand for foreign varieties under the assumption that domestic and foreign varieties are imperfect substitutes. In particular, the demand for imported varieties is more elastic for countries with comparative advantage. For an average good facing a median trade barrier, doubling the importer–exporter relative export performance decreases the number of imported varieties by 17%. Our findings suggest that the variety gains estimates could be significantly biased if we ignore the substitutability between imported and domestic varieties.     

Asymmetric effects of financial development on export price and quality across countries

We derive two novel predictions: financial development has a more pronounced effect on quality in countries with greater labor productivity, and its effect on export prices is U‐shaped in labor productivity. We confirm our predictions empirically and show that the negative effect of financial development on export prices is greatest in middle‐productivity countries, while its positive effect on quality is strongest in the most productive countries. Our findings contribute to the literature on the poverty trap: we argue that improving the quality of financial institutions alone is unlikely to boost quality or lower prices of the poorest countries.     

Moldova's internet revolution: Analyzing the role of technologies in various phases of the confrontation

In recent times we have witnessed the fundamental impacts that information and communication technologies (ICTs) have had on the outcomes of contentious political confrontations. In this paper, we analyze the role played by Internet-based and cellular ICTs in Moldova's Revolution of April 2009. Specifically, we identify what, why, and how technologies were used during various phases of the uprising. Our findings show that: 1) the protesters organized their initial mobilization through social network services (SNS) and short message service (SMS); 2) Twitter was mostly used during later phases of the revolution – the active street protests and the subsequent information war – for communication about the conflict both locally and globally; and 3) through skillful use of new Internet-based ICTs, it is possible to conduct a successful revolution without noticeable prior offline organization. Theoretical and practical implications for the use of ICTs in contentious political environments are also discussed.     

Asymmetric Regulation and Airport Dominance in International Aviation: Evidence from the London-New York Market

International airline markets have the rather unusual feature of partial deregulation with asymmetric regulatory constraints: Some carriers face entry restrictions different from others for a given route. Like domestic air travel, international travel also features hubs, where a single carrier may dominate a given airport. This article examines the effects of asymmetric regulation and airport dominance on airlines' fares in the London-New York market, a market uniquely suited for identifying the effects of both of these issues. Comparison data from the symmetrically regulated Frankfurt-New York and Paris-New York markets enable a difference-in-differences identification strategy. Regulatory restrictions are found to decrease an affected carrier's fares, whereas airport dominance increases a dominant airline's fares.     

Price effects of airline consolidation: evidence from a sample of transatlantic markets

We offer an analysis of price effects of airline consolidation on a sample of transatlantic markets. While joining airlines’ networks through code-sharing decreases interline fares by up to 22.5% relative to those of non-consolidated carriers, and alliance membership also produces cost savings that decrease fares by up to 10%, antitrust immunity has no significant price effect for interline trips. Evidence that antitrust immunity increases fares on non-stop routes where it decreases competition is not robust. While total effect of airline consolidation on interline fares is about the same as indicated by previous studies, we suggest different sources of this effect. This paper is the first one presenting empirical evidence of no significant price effects of antitrust immunity.      

Services liberalization and productivity of manufacturing firms

Employing a unique database of Ukrainian firms in 2001–07, we use the external push for liberalization in the services sector as a source of exogenous variation to identify the effect of services liberalization on total factor productivity (TFP) of manufacturing firms. The results indicate that a standard deviation increase in services liberalization within a firm is associated with a 9.2 percent increase in TFP. The effect is stronger for firms with high productivity, bringing about a reallocation of resources within an industry. Industry‐level results show that the effect of reallocation on industry productivity is almost as strong as the within‐firm effect. The dynamic interaction of services liberalization and TFP through the investment channel reinforces the effect. The effect is robust to different estimation methods and to different sub‐samples of the data. In particular, it is more pronounced for domestic and small firms.     

Big business in the Russian empire: A European perspective

This paper presents an inventory of the largest private companies in the Russian Empire in 1914, and their comparison to the largest contemporary British, German, and French companies identified by Youssef Cassis as ‘big business’. It focusses on three questions. First, how big was big business in Russia from a European perspective? Second, how did the structure of big business in Russia compare to that of other large European economies? And finally, how did foreign entrepreneurship appear in Russian big business? Drawing on new empirical evidence, it contributes to the discussion on the ‘backward’ and ‘peripheral’ character of the Russian economy before the First World War.     

Regulation, privatization, and airport charges: panel data evidence from European airports

This paper examines the determinants of airport aeronautical charges by employing a unique panel dataset covering sixty-one European airports over an eighteen-year period. We are able to extend the literature on the role of airports as an essential element in transport infrastructure by offering the first analysis of the impact of different regulatory policies and privatization on airport charges in a panel data setting where fixed effects can be employed to mitigate endogeneity concerns. Our main empirical results indicate that aeronautical charges are lower at airports when single-till regulation is employed, when airports are privatized, and??tentatively??when ex post price regulation is applied. Furthermore, hub airports generally set higher aeronautical charges, and it appears that price-cap regulation and the presence of nearby airports do not affect aeronautical charges.