Abstract
Directed acyclic graphs and multivariate time-series analysis are used to identify and measure the effect of lock delay on the upper Mississippi and Illinois Rivers grain barge rates. Lock congestion on these rivers and its potentially unfavorable impact on grain barge rates that link the Midwest US to lower Mississippi River ports are of great concern. Results show that accumulated lock delay on segments of the upper Mississippi and Illinois Rivers increases grain barge rates; however, the estimated dynamic relationships show that the impact is not large.
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Notes
Grain barge volume on the river and grain barge rates may be simultaneously determined and thus a two-way arrow would apply in Fig. 3 between these two variables. We tested for endogeneity of barge numbers (as a proxy for the unavailable measure on grain barge volume) in a barge rate equation using a Hausman test for endogeneity (Wooldridge 2002). As Japan is a primary importing country of US grain, the exchange rate of Japanese yen to US dollar is a good candidate as an instrument to measure for the grain quantity moved by barge on the river. For this instrument, we reject the hypothesis of endogeneity of total barge numbers at the 5% significance level. On the other hand, we demonstrate in the empirical section of this paper (see Table 2) that grain barge rates do affect barge numbers at lags. Detailed results on this test are available from the authors.
The functional form of the underlying marginal cost curve is unknown; we assume it is constant over the study range. Of course, textbook forms do not have a constant slope on the marginal cost function, thus our results are an approximation.
The purpose of this figure is to offer a sense of the response from viewing the overall pattern in one graph.
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Yu, TH., Bessler, D.A. & Fuller, S.W. Effect of lock delay on grain barge rates: examination of upper Mississippi and Illinois Rivers. Ann Reg Sci 40, 887–908 (2006). https://doi.org/10.1007/s00168-005-0057-z
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DOI: https://doi.org/10.1007/s00168-005-0057-z