Work

Time as a Trade Barrier

Year: 2002

Type: report

Abstract: A large and growing share of world trade travels by air. We model exporters' choice between fast, expensive air cargo and slow, cheap ocean cargo, which depends on the price elasticity of demand and the value that consumers attach to fast delivery. We use US imports data that provide rich variation in the premium paid for air shipping and in time lags for ocean transit to extract consumers' valuation of time. We estimate that each day in transit is equivalent to an advalorem tariff of 0.6 to 2.1 percent. The most time-sensitive trade flows involve parts and components trade. (JEL F13, F14, L93)

Source: GTAP working paper series

DOI: 10.21642/gtap.wp18

Authors: David L Hummels, Georg Schaur

Institutions: National Bureau of Economic Research, Purdue University West Lafayette, University of Tennessee at Knoxville

Language: English

Topic: Global trade and economics

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: bronze

Funder: National Science Foundation

Award: Time as a Trade Barrier