Veiled Waters: Examining the Jones Act's Consumer Welfare Effect

This paper analyzes how The Jones Act, a maritime law that effectively closes the United States’ coastal shipping routes to foreign firms, impacts the economic welfare of domestic ocean transport consumers. Though it has long been speculated that the Act is economically detrimental to the United States, and some efforts to examine this have been made in the past, the data needed to facilitate precise estimates was not available until very recently. Using an original framework, I apply this new data in generating a better understanding of how the Jones Act’s trade restrictions translate into economic consequences. Section 1 frames the Act within its broader political-economic context and describes the motivation behind my question along with my approach to answering it. Section 2 describes the maritime shipping industry and the Jones Act’s place within it, while Section 3 addresses related findings from past research and how they impel this study. Section 4 details my methodology (along with corresponding economic intuition) and presents the thesis’ finding: that consumers of the domestic maritime transport would be significantly better off (on the order of more than $578 million/year, in monetary terms) if the Jones Act’s restrictions were not in place. Section 5 discusses the potential implications of this result for other sectors of the economy as well as for the direction of future public policy.