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Presented By: Department of Economics

Network Complementarities in Maritime Trade Infrastructure: Evidence from the Philippines

Seongyoon Kim, University of Michigan

Seongyoon "S.Y." Kim Seongyoon "S.Y." Kim
Seongyoon "S.Y." Kim
This paper tests for network complementarities in port infrastructure by examining whether Roll-On Roll-Off (RORO) upgrades at Fillipino ports generate bilateral trade gains beyond the sum of individual port effects. Using port-to-port commodity flow data, I find that routes where both ports have RORO trade 23% more than predicted by the individual effects alone. I also propose an interaction event study to investigate the dynamic effects and find evidence that these effects show zero pretrends and have positive dynamic effects. I embed these estimates in an Eaton-Kortum model with island geography and show that complementarity generates a superadditivity premium, implying coordinated port investments dominate sequential upgrades.

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