Handling Risk: Testosterone and Risk Preference, Evidence from Dhaka, Bangladesh

The relationship between testosterone and risk aversion is of increasing interest in the experimental economics. Using the ratio of the second digit to the fourth digit (2D:4D) as a rough indicator of level of prenatal testosterone exposure, this study attempts to replicate recent results from Garbarino et al., (2011), which found that individuals with digit ratios above the sample average were significantly more risk averse, and individuals with digit ratios one standard deviation below the sample average were significantly more risk seeking in a subject pool of male and female Caucasian students. Here, a subject pool from Dhaka, Bangladesh, is used. The results are somewhat mixed, but similar to the findings in Garbarino et al (2011). This study also controlled for other factors that have been shown to contribute to risk preference in an e↵ort to make sure any relationship found between digit-ratio and risk aversion did not arise due to omitted variables

Rules of Origin Liberalization with Multi-Product Firms: Theory and Evidence from Bangladeshi Apparel Exporters

I study how rules of origin in potential export destinations influence firm- and industry-level export behavior in least-developed countries (LDCs). Rules of origin restrict LDCs from taking advantage of preferential tariff rates in export markets, and this undermines market access for LDCs and reduces the efficacy of export-oriented industrialization. I develop a model of multi-product firms in which rules of origin influence the product scope and export revenue of final goods producers through their effect on input sourcing decisions. I test the model's predictions using the 2011 revisions to the EU's rules of origin for apparel products from LDCs. To control for the potential endogeneity of the policy change I use a triple-difference approach, exploiting variation in the input-cost differentials across apparel products and export destination, before and after the EU policy change. Liberalizing rules of origin results in revenue gains, expansion of product scope, and firm entry into the export market. Within firms, incumbents upgrade product quality. Across firms, market share is reallocated toward more productive incumbents

Rules of Origin Liberalization with Multi-Product Firms: Theory and Evidence from Bangladeshi Apparel Exporters

I study how rules of origin in potential export destinations influence firm- and industry-level export behavior in least-developed countries (LDCs). Rules of origin restrict LDCs from taking advantage of preferential tariff rates in export markets, and this undermines market access for LDCs and reduces the efficacy of export-oriented industrialization. I develop a model of multi-product firms in which rules of origin influence the product scope and export revenue of final goods producers through their effect on input sourcing decisions. I test the model's predictions using the 2011 revisions to the EU's rules of origin for apparel products from LDCs. To control for the potential endogeneity of the policy change I use a triple-difference approach, exploiting variation in the input-cost differentials across apparel products and export destination, before and after the EU policy change. Liberalizing rules of origin results in revenue gains, expansion of product scope, and firm entry into the export market. Within firms, incumbents upgrade product quality. Across firms, market share is reallocated toward more productive incumbents

Essays on International Trade

Through trade policy actions, decades of global trade liberalization have resulted in lower formal trade barriers. However, there remain significant barriers to trade that fall outside the realm of traditional policy tools. This dissertation analyzes two under-studied non-tariff trade barriers: natural disasters and rules of origin. While there are fundamental differences in how these trade barriers arise, both natural disasters and rules of origin have meaningful implications for the functioning of global trade systems, the formation of global value chains, and consumer welfare. The three essays in this dissertation provide evidence that these under-studied trade barriers have a significant impact on trade flows. In Chapter II, I find that rules of origin liberalization can restore preferential market access and improve firm-level export growth in least-developed countries (LDCs). In Chapter III, I find evidence that hurricanes reduce trade volumes from US ports, and that the effect is highly persistent. Finally, in Chapter IV, using detailed data on international shipments, I show that hurricane activity around US ports-of-exit affects aggregate exports through price indices, and as a result, affects average consumer welfare. In the case of rules of origin, the results highlight the crucial role that non-tariff barriers play in the formation of trade agreements. In the case of natural disasters, the findings presented in this dissertation highlight the importance of designing policy aimed at addressing unexpected shocks to global trade

Estimating the Demand for Railroad and Barge Movements of Corn in the Upper Mississippi River Valley

Transportation is a key element in the movement of agricultural products to market. The level and nature of demand for different modes has a significant influence on the prices agricultural shippers pay, the routes that are taken, and whether public and/or private investments are warranted. Modal demands, however, are influenced by the geography of the shippers and characteristics of the commodity transported. Shippers located a long distance from the river tend to ship by rail (at least for long-haul movements), while shippers located near the waterway typically ship by barge, as truck-to-barge rates are often considerably lower than rail. The prices paid by shippers also depend on these same characteristics. While truck and barge markets are often thought to be competitive, railroads have considerable latitude in the rates they charge, and the range of observed prices is quite large. In areas where barge is a viable option, railroads may be constrained by barge rates, while in areas where barge is not a feasible option, railroads may choose higher prices (Anderson and Wilson (2008), Burton (1993), MacDonald (1987; 1989)). In between, railroads can choose a set of prices that exclude rail to barge routings in favor of all-rail routings even though the multimodal routing is less costly (Burton and Wilson (2006)). At the root of competition is the presence and availability of substitutes. As noted, in the case of rail and barge transportation, barge is relatively more attractive for locations close to the river. However, as the distance from the waterway increases, barge becomes less attractive and eventually is not used. However, the catchment area for barge—the range at which barge is a feasible mode for shippers—has received relatively little attention, and the relationship between modal demands and catchment areas has typically not been investigated. These relationships are central not only to pricing but also to the feasibility of both public and private infrastructure investments. For example, the U.S. Army Corps of Engineers (USACE) uses barge demand models in their calculation of the benefits of waterway investments. Controversies over their planning models in the late 1990s led to a number of transportation demand studies intending to estimate barge volumes for their calculations. Most of these studies relied on survey data of shippers in a river system (e.g., Columbia-Snake river valleys, Upper Mississippi-Illinois river valleys, and the Ohio). From the surveys, data were collected on shipper choices and options and analyzed using choice methods to estimate demands. Generally, the spatial environment of shippers in these studies was reflected in the choices made. That is, shippers located a long distance from the waterway typically chose rail, while shippers near the waterway typically chose barge. In this sense, the spatial boundaries are inherent in the choices made by the shippers and not used to define spatial boundaries (i.e., the catchment area for barge). The overriding objective of this research is to accurately capture the linkages between the demands for barge and rail freight movement. We develop a methodology—using data for corn, the top agricultural product in terms of tonnage—that considers a wide range of catchment areas using non-survey data. Essentially, we use available data within an area and estimate barge versus rail demand choices. Our approach utilizes the unmasked confidential waybill sample (CWS) of the Surface Transportation Board (STB) and the Waterborne Commerce Statistics (WCS) of the Army Corps of Engineers. The former gives the origin and destination of rail shipments, while the latter gives the origin and destination of barge movements. While this paper focuses on corn, such a methodology could be used to investigate the linkage between modes for any commodity. The main results of this research are: • Most barge shipments terminate in the Central Gulf, while rail shipments are much more diverse, with most terminating in the Illinois, Lower Ohio, Lower Mississippi, or Central Gulf regions. • In the region of study, barge shipments comprise approximately 86 percent of annual tonnage on average. And, the fraction of tonnage shipped by each mode is consistent throughout the sample period (2000 to 2017). • There is uniformity in the results for zones in which both rail and barge are present. That is, there is a preference for barge over rail, holding rates constant, and the rates of barge and rail have an effect that is both economically and statistically important in explaining a shipper’s destination and mode choice. • The preference for barge, however, dissipates, as the distance to the nearest waterway increases. That is, as the distance band (the distance from the river) increases, the coefficient on barge falls. This means that barge is less preferable to rail, given all else is the same, as distance to barge increases. The preference for barge is quite high within 50 miles of the waterway and falls to zero (statistically) for distance bands of about 175 miles. This means that shippers located near the river have a preference for barge, but this preference becomes less important with the distance from the waterway, and by 175 miles or so there is no preference for barge over rail. • As would be expected, the coefficient on rates is negative and statistically significant for all distance bands considered. That is, regardless of the distance from the waterway, we find that a higher rate for a particular mode and route reduces the likelihood a shipper will choose that option. While there are some differences in the coefficient estimates across different distance bands, they are remarkably consistent overall. • Conditional on selecting where to ship, the probability of shipping by barge declines as the barge rate increases but the choice of where to ship does not respond strongly to changes in freight rates, as most of the annual tonnage flows to the Central Gulf. Our results suggest modal substitution for corn is present and persists over a range of different distance bands. The findings provide agricultural stakeholders with information on how the pricing and availability of one mode will impact the other. It also provides an alternative approach to estimating the demands for waterway traffic that both recognizes the effects of competing modes and can be applied to evaluating the effects of waterway proximity on railroad competition and pricing

Estimating the Demand for Railroad and Barge Movements of Corn in the Upper Mississippi River Valley

Transportation is a key element in the movement of agricultural products to market. The level and nature of demand for different modes has a significant influence on the prices agricultural shippers pay, the routes that are taken, and whether public and/or private investments are warranted. Modal demands, however, are influenced by the geography of the shippers and characteristics of the commodity transported. Shippers located a long distance from the river tend to ship by rail (at least for long-haul movements), while shippers located near the waterway typically ship by barge, as truck-to-barge rates are often considerably lower than rail. The prices paid by shippers also depend on these same characteristics. While truck and barge markets are often thought to be competitive, railroads have considerable latitude in the rates they charge, and the range of observed prices is quite large. In areas where barge is a viable option, railroads may be constrained by barge rates, while in areas where barge is not a feasible option, railroads may choose higher prices (Anderson and Wilson (2008), Burton (1993), MacDonald (1987; 1989)). In between, railroads can choose a set of prices that exclude rail to barge routings in favor of all-rail routings even though the multimodal routing is less costly (Burton and Wilson (2006)). At the root of competition is the presence and availability of substitutes. As noted, in the case of rail and barge transportation, barge is relatively more attractive for locations close to the river. However, as the distance from the waterway increases, barge becomes less attractive and eventually is not used. However, the catchment area for barge—the range at which barge is a feasible mode for shippers—has received relatively little attention, and the relationship between modal demands and catchment areas has typically not been investigated. These relationships are central not only to pricing but also to the feasibility of both public and private infrastructure investments. For example, the U.S. Army Corps of Engineers (USACE) uses barge demand models in their calculation of the benefits of waterway investments. Controversies over their planning models in the late 1990s led to a number of transportation demand studies intending to estimate barge volumes for their calculations. Most of these studies relied on survey data of shippers in a river system (e.g., Columbia-Snake river valleys, Upper Mississippi-Illinois river valleys, and the Ohio). From the surveys, data were collected on shipper choices and options and analyzed using choice methods to estimate demands. Generally, the spatial environment of shippers in these studies was reflected in the choices made. That is, shippers located a long distance from the waterway typically chose rail, while shippers near the waterway typically chose barge. In this sense, the spatial boundaries are inherent in the choices made by the shippers and not used to define spatial boundaries (i.e., the catchment area for barge). The overriding objective of this research is to accurately capture the linkages between the demands for barge and rail freight movement. We develop a methodology—using data for corn, the top agricultural product in terms of tonnage—that considers a wide range of catchment areas using non-survey data. Essentially, we use available data within an area and estimate barge versus rail demand choices. Our approach utilizes the unmasked confidential waybill sample (CWS) of the Surface Transportation Board (STB) and the Waterborne Commerce Statistics (WCS) of the Army Corps of Engineers. The former gives the origin and destination of rail shipments, while the latter gives the origin and destination of barge movements. While this paper focuses on corn, such a methodology could be used to investigate the linkage between modes for any commodity. The main results of this research are: • Most barge shipments terminate in the Central Gulf, while rail shipments are much more diverse, with most terminating in the Illinois, Lower Ohio, Lower Mississippi, or Central Gulf regions. • In the region of study, barge shipments comprise approximately 86 percent of annual tonnage on average. And, the fraction of tonnage shipped by each mode is consistent throughout the sample period (2000 to 2017). • There is uniformity in the results for zones in which both rail and barge are present. That is, there is a preference for barge over rail, holding rates constant, and the rates of barge and rail have an effect that is both economically and statistically important in explaining a shipper’s destination and mode choice. • The preference for barge, however, dissipates, as the distance to the nearest waterway increases. That is, as the distance band (the distance from the river) increases, the coefficient on barge falls. This means that barge is less preferable to rail, given all else is the same, as distance to barge increases. The preference for barge is quite high within 50 miles of the waterway and falls to zero (statistically) for distance bands of about 175 miles. This means that shippers located near the river have a preference for barge, but this preference becomes less important with the distance from the waterway, and by 175 miles or so there is no preference for barge over rail. • As would be expected, the coefficient on rates is negative and statistically significant for all distance bands considered. That is, regardless of the distance from the waterway, we find that a higher rate for a particular mode and route reduces the likelihood a shipper will choose that option. While there are some differences in the coefficient estimates across different distance bands, they are remarkably consistent overall. • Conditional on selecting where to ship, the probability of shipping by barge declines as the barge rate increases but the choice of where to ship does not respond strongly to changes in freight rates, as most of the annual tonnage flows to the Central Gulf. Our results suggest modal substitution for corn is present and persists over a range of different distance bands. The findings provide agricultural stakeholders with information on how the pricing and availability of one mode will impact the other. It also provides an alternative approach to estimating the demands for waterway traffic that both recognizes the effects of competing modes and can be applied to , Toevaluating the effects of waterway proximity on railroad competition and pricing

A Study of Grain and Soybean Export Flows: Uncovering Their Determinants and Implications for Infrastructure Investment

According to the USDA’s Foreign Agricultural Service, U.S. farmers export more than 20 percent of what they produce. Since 2000, exports have been rising virtually every year, increasing from $58 billion in 2000 to over$133 billion in 2015. This growth has put pressure on U.S. ports which are vital links to foreign entities and trade. Investment in ports can and do have a significant influence on trade flows. However, there is little research that examines determinants of flows from a port to a foreign country or from the production-rich U.S. interior to the ports en route to foreign countries. In this study, we provide a comprehensive examination of trade for selected agricultural commodities, namely corn, soybeans, wheat, and grain sorghum. This examination includes a description of the countries that import these commodities and the U.S. ports from which they import, as well as a description of the domestic U.S. suppliers of these commodities and the U.S. ports they use to export over time. A focus of the analysis is on the ports that importers and exporters choose to use. Two separate econometric analyses are presented: an “importer analysis” and an “exporter analysis.” In both cases, the analyses focus on the ports used. In the importer analysis (Section I), we model decisions of 151 foreign countries from 96 U.S. ports from 2003 to 2017, and explain which ports are used and the intensity of trade (quantity) between the foreign country and the U.S. port. In the second, exporter analysis (Section 2), we examine the decisions of 70 different origination points in the Upper Midwest and their choice of ports (i.e., where they send their product) from 2014 to 2018. In both cases, the decisions are framed in terms of shipping rates, port identifiers, and port attributes. In both the import demand and export supply analyses, we find that the cost of transportation and port attributes are important variables. The results are then used to evaluate the changes in trade to changes in the transportation costs and in port attributes. In the importer model, the results are restricted to sea-going movements. In the exporter model, ports with a barge option (from movements in the study area) are more likely to be chosen than ports without a barge option, and West coast ports are more likely to be chosen than Northeast ports. The results are also used to measure the responsiveness of decisions to changes in rates and port attributes. Finally, we calculate “willingness to pay” for deeper channels and longer berthing lengths, which are key to evaluating the benefits of investments. In our analysis, the ranking of U.S. ports by total agricultural export tonnage has remained relatively consistent from 2002 to 2017. However, the market share of the top ranked ports has fallen, while the market share of lower ranked ports has grown. The decline in market shares for the top ports and increase in market shares for lower ranked ports indicates that importing countries have diversified the ports used when importing agricultural goods from the United States. More specifically, we find: • Importers of U.S. agricultural products are less likely to choose ports with high associated shipping costs. As freight rates rise, the probability that a port is chosen falls, while the probability that another port is chosen rises. • On the other hand, importers of U.S. agricultural products are more likely to select ports with deeper channels and longer total berthing lengths. • Exporters of U.S. agricultural products are also more likely to ship goods from ports with deeper channels and longer total berthing lengths. Similarly, as freight rates rise, the probability a port is chosen falls. • Competition in barge and rail shipping markets influence how exporters of U.S. agricultural products choose to export. As barge rates rise, the probability of selecting to ship goods by barge to U.S. ports falls and the probability of selecting to ship goods by rail rises

Estimating the Demand for Railroad and Barge Movements of Corn in the Upper Mississippi River Valley

Transportation is a key element in the movement of agricultural products to market. The level and nature of demand for different modes has a significant influence on the prices agricultural shippers pay, the routes that are taken, and whether public and/or private investments are warranted. Modal demands, however, are influenced by the geography of the shippers and characteristics of the commodity transported. Shippers located a long distance from the river tend to ship by rail (at least for long-haul movements), while shippers located near the waterway typically ship by barge, as truck-to-barge rates are often considerably lower than rail. The prices paid by shippers also depend on these same characteristics. While truck and barge markets are often thought to be competitive, railroads have considerable latitude in the rates they charge, and the range of observed prices is quite large. In areas where barge is a viable option, railroads may be constrained by barge rates, while in areas where barge is not a feasible option, railroads may choose higher prices (Anderson and Wilson (2008), Burton (1993), MacDonald (1987; 1989)). In between, railroads can choose a set of prices that exclude rail to barge routings in favor of all-rail routings even though the multimodal routing is less costly (Burton and Wilson (2006)). At the root of competition is the presence and availability of substitutes. As noted, in the case of rail and barge transportation, barge is relatively more attractive for locations close to the river. However, as the distance from the waterway increases, barge becomes less attractive and eventually is not used. However, the catchment area for barge—the range at which barge is a feasible mode for shippers—has received relatively little attention, and the relationship between modal demands and catchment areas has typically not been investigated. These relationships are central not only to pricing but also to the feasibility of both public and private infrastructure investments. For example, the U.S. Army Corps of Engineers (USACE) uses barge demand models in their calculation of the benefits of waterway investments. Controversies over their planning models in the late 1990s led to a number of transportation demand studies intending to estimate barge volumes for their calculations. Most of these studies relied on survey data of shippers in a river system (e.g., Columbia-Snake river valleys, Upper Mississippi-Illinois river valleys, and the Ohio). From the surveys, data were collected on shipper choices and options and analyzed using choice methods to estimate demands. Generally, the spatial environment of shippers in these studies was reflected in the choices made. That is, shippers located a long distance from the waterway typically chose rail, while shippers near the waterway typically chose barge. In this sense, the spatial boundaries are inherent in the choices made by the shippers and not used to define spatial boundaries (i.e., the catchment area for barge). The overriding objective of this research is to accurately capture the linkages between the demands for barge and rail freight movement. We develop a methodology—using data for corn, the top agricultural product in terms of tonnage—that considers a wide range of catchment areas using non-survey data. Essentially, we use available data within an area and estimate barge versus rail demand choices. Our approach utilizes the unmasked confidential waybill sample (CWS) of the Surface Transportation Board (STB) and the Waterborne Commerce Statistics (WCS) of the Army Corps of Engineers. The former gives the origin and destination of rail shipments, while the latter gives the origin and destination of barge movements. While this paper focuses on corn, such a methodology could be used to investigate the linkage between modes for any commodity. The main results of this research are: • Most barge shipments terminate in the Central Gulf, while rail shipments are much more diverse, with most terminating in the Illinois, Lower Ohio, Lower Mississippi, or Central Gulf regions. • In the region of study, barge shipments comprise approximately 86 percent of annual tonnage on average. And, the fraction of tonnage shipped by each mode is consistent throughout the sample period (2000 to 2017). • There is uniformity in the results for zones in which both rail and barge are present. That is, there is a preference for barge over rail, holding rates constant, and the rates of barge and rail have an effect that is both economically and statistically important in explaining a shipper’s destination and mode choice. • The preference for barge, however, dissipates, as the distance to the nearest waterway increases. That is, as the distance band (the distance from the river) increases, the coefficient on barge falls. This means that barge is less preferable to rail, given all else is the same, as distance to barge increases. The preference for barge is quite high within 50 miles of the waterway and falls to zero (statistically) for distance bands of about 175 miles. This means that shippers located near the river have a preference for barge, but this preference becomes less important with the distance from the waterway, and by 175 miles or so there is no preference for barge over rail. • As would be expected, the coefficient on rates is negative and statistically significant for all distance bands considered. That is, regardless of the distance from the waterway, we find that a higher rate for a particular mode and route reduces the likelihood a shipper will choose that option. While there are some differences in the coefficient estimates across different distance bands, they are remarkably consistent overall. • Conditional on selecting where to ship, the probability of shipping by barge declines as the barge rate increases but the choice of where to ship does not respond strongly to changes in freight rates, as most of the annual tonnage flows to the Central Gulf. Our results suggest modal substitution for corn is present and persists over a range of different distance bands. The findings provide agricultural stakeholders with information on how the pricing and availability of one mode will impact the other. It also provides an alternative approach to estimating the demands for waterway traffic that both recognizes the effects of competing modes and can be applied to evaluating the effects of waterway proximity on railroad competition and pricing