Restrictions on cabotage in the U.S. mean that if a Canadian truck takes a load to the U.S., and cannot find a return load to Canada, they have to return empty. Canadian truckers are prohibited from carrying loads with both a U.S. origin and destination. Canada imposes reciprocal restrictions on U.S. carriers with respect to cross-border trucking.

(a) Draw an appropriate model(s) to explain how the removal of these restrictions would affect the costs of transport between the U.S. and Canada.

(b) Explain why the removal of this restriction might not have any effects on freight rates in some cross-border markets.