abstract
We study how dependence on maritime routes and foreign vessel capacity shapes vulnerability to disruptions. We develop an analytical framework linking trade exposure, shipping-cost changes, and producer-price adjustment to welfare losses and to the incentives to initiate disruptions. These incentives depend on the target’s loss relative to the economic cost borne by the disruptor. Combining data on vessel registries, port rotations, and bilateral trade, we measure each country’s exposure to shipping lanes, its scope for rerouting, and its reliance on foreign-operated and foreign-built vessels. We then quantify the welfare impact of maritime disruptions in a spatial equilibrium model with endogenous routing and vessel deployment, which can account for the observed rerouting and cross-market freight rate responses during the Red Sea crisis. We find that exposure need not imply vulnerability: the cost of disrupting a route depends on whether ships can sail around it. U.S. losses are spread across distant chokepoints, while China’s are larger and concentrated in East Asia, and the largest losses fall on small economies near major chokepoints. Disruptions that affect several nearby chokepoints at once, as around Taiwan and the South China Sea, remove these alternatives, so a disruption there that restricts only some countries’ cargo can impose large losses on them at little cost to others. Dependence on foreign vessels also shapes vulnerability: because routes compete for the same fleet, a withdrawal of Chinese-operated or Chinese-built vessels from routes serving the United States imposes larger losses on several Asian economies than on the United States itself.
abstract
How do large export-demand shocks propagate across connected labor markets? This paper studies the regional incidence of the WWI trade boom in Spain using newly assembled data on product-destination exports, province-sector wages and employment, and province-product consumer prices (1910-1920). Exploiting plausibly exogenous shifts in foreign demand from belligerent nations, I use a reduced-form design that decomposes exposure into direct (local) effects and spillovers across connected markets. Exposed markets experienced large increases in nominal wages and employment; within-province wage spillovers are roughly half the size of the direct effect. These nominal gains were partially offset by rising local consumer prices. To interpret these patterns, I develop a quantitative spatial equilibrium model with nested labor mobility across regions and sectors. The model implies that limited interprovincial mobility dampened worker reallocation and amplified wage and price pressures, shaping the spatial distribution of real-income gains. Counterfactuals show that spatial labor-market segmentation is an important amplifier of incidence: removing spatial migration frictions reduces cross-province dispersion in nominal wages and real income, while shifting adjustment toward reallocation rather than local wage/price pressure. Moreover, making the export-demand impulse spatially even sharply compresses inflation dispersion, implying that both the geography of the shock and domestic segmentation are first-order for the distribution of gains.
abstract
We study the trade-off firms face when exporting to countries with different tastes and volatile demand. In our model, firms face a portfolio problem where they trade off supplying the largest consumer groups against higher exposure to group-specific risk. We develop an empirical strategy to estimate consumer taste from observed market shares, as well as the key parameters that pin down the firm’s portfolio choice problem. We apply our framework to estimate the impact of the rise of China on the global movie market and characterize the heterogeneous welfare effects across countries. A calibrated version of our model suggests a modest average consumer welfare loss as firms prioritize products that provide insurance value.
