Comparative statics, stability and imperfect competition in international trade models with transportation costs

International trade models that treat international transportation as a service that is an input into the trade activity and is in other respects symmetric to other goods and services are set up and analyzed.;In perfectly competitive, one- and two-factor, two country, two consumption good general equilibrium models, the Marshall-Lerner condition is insufficient for stability in the presence of a resource-using transportation sector that is independent from the other productive sectors in the model.;In a partial equilibrium model with a monopolistic manufacturing firm that exports its product and conjectures that the price of international transportation is constant and with a monopolistic transportation firm that conjectures that a change in the freight rate results in a one-for-one change in the delivered price, it is determined whether a small production tax or subsidy will improve welfare, given that the current policy is laissez-faire. For most cases, if domestic and export demand functions are independent, a more convex export demand function pulls the preferred policy toward subsidization and a more concave export demand function pulls it toward taxation. Under c.i.f. pricing, a no arbitrage condition constrains the convexity of demand in such a way that the preferred policy for a country with the transportation firm is definitely a tax, as long as the manufacturer's export market is not the transportation producing country.;In a perfectly competitive one-factor, two country, two consumption good general equilibrium model with traded transportation and identical and strongly homothetic demand, technical progress in all industries in the foreign country that causes a shift of transportation production from the home to the foreign country may lower the home country's terms of trade and real income and technical progress in a country's export sector can lower its real income if its trading partner is producing all of the transportation. An income transfer will lower the paying country's terms of trade if it is producing all the transportation and will raise it if the receiving country is producing all the transportation.