This study investigates the effects of the transportation cost on the international trade. The first essay explores the effect of the transportation cost on the quality composition of trade. We derive a relationship between per unit and ad-valorem trade costs and the quality composition of trade...

The authors argue that endogeneity of transportation costs needs to be taken into account when estimating the effect of distance on trade. Otherwise, the estimates of the distance effect may be biased and inconsistent. Endogenous transportation can introduce slope heterogeneity and spatial...

This paper examines how the quality of exports depends on relative country size and its remoteness. Specific transportation cost is the key variable in our analysis as it gives rise to the Alchian-Allen effect. In the model, we allow for endogenous quality choice by a producer serving many...