Vincenzo Merella (University of Cagliari, VŠE FMV International Economics Research Center) 8.10.2026

It is our pleasure that Vincenzo Merella (University of Cagliari, VŠE FMV International Economics Research Center) will present on Thursday, October 8, 2026, at 12:45 in room RB437 about the topic “Air or Sea? Quality-Driven Sorting in International Trade (with Esteban Jaimovich)”.

Registration is not required and anyone who would like to attend is warmly invited.

It is also possible to participate online via MS Teams at this link. In case of any connection issues, please contact lubomir.cingl@vse.cz.

ABSTRACT: We study how product quality shapes the choice between air and sea freight. In a model with non-homothetic demand and income uncertainty, exporters face a timing wedge: sea shipments must commit quantities before uncertainty resolves, whereas air shipments can be better timed but at higher cost. The model implies a sharp modal sorting for vertically differentiated products: high-quality varieties fly while lower-quality varieties sail. It also predicts that the average air–sea quality gap shrinks as sea routes lengthen relative to air routes. Using U.S. customs data at the exporter–district–product level, and proxying quality with FOB unit values, we document patterns consistent with both predictions. In addition, reduced-form and 2SLS estimates based on the interaction between district-level personal-income volatility and maritime distance indicate that uncertainty-induced shifts away from sea transport lower the average unit value of air shipments, consistent with quality re-sorting across modes. Calibrated counterfactuals show that higher demand volatility reshapes selection in a distance-dependent way, tightening it on short routes while expanding air-based participation on long routes, whereas COVID-type air-freight disruptions and tariff-type marginal-cost shocks disproportionately hit profits for high-quality, long-distance exporters, and push marginal exporters to switch from air to sea.

BIO: Vincenzo Merella is an economist at the Department of Economics and Business at the University of Cagliari. He is also affiliated with the Faculty of International Relations at the University of Economics, Prague, and the Birkbeck Centre for Applied Macroeconomics at the University of London. His research covers international trade, asset pricing, consumer theory, and economic growth.