Title:  Substitutability Across Modes of Transport: Implications for International Trade

Abstract: In this work I study the effect of substitutability of modes of transport in international trade. Firstly, I document European composition of imports and exports flows by mode of transport. I identify two main patterns: (i) on average more than one mode is used on the same route and (ii) the share of value transported by each mode reacts to change in costs. To do so, I use Ukrainian-Russian airspace's closure as a proxy for the increase in transportation costs. I build a Ricardian model of trade with multiple modes of transport that can reproduce these patterns. The model generates a gravity equation in which modes-specific shocks are partially absorbed by changes in the share of value traded with each mode. Finally, I show how this model could be used to study the impact for international trade of a carbon tax on specific transportation sectors.