How do transport costs affect firms' exports? Evidence from a vanishing bridge

- This paper provides rigorous estimates of the impact of transport costs on firms' exports.
- We use customs-based transaction-level data on trade and transport costs.
- In order to address endogeneity concerns, we exploit a “natural experiment”.
- Estimates suggest that 1% increase in transport costs results in a 6.5% reduction in firms' export values.
- This effect can be traced back to a reduction in the number and size of shipments.

In this paper we provide estimates of the effects of international transport costs on firms' exports and disentangle the channels of these effects. In so doing, we use a unique dataset consisting of highly disaggregated transaction-level trade and transport cost data and, in order to account for endogeneity, we exploit the exogenous variation in these costs associated with the non-trade related closure of the main bridge connecting two countries.