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American Economic Review: Vol. 103 No. 7 (December 2013)

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Time as a Trade Barrier

Article Citation

Hummels, David L., and Georg Schaur. 2013. "Time as a Trade Barrier." American Economic Review, 103(7): 2935-59.

DOI: 10.1257/aer.103.7.2935

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.

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Online Appendix (524.96 KB) | Download Data Set (338.56 MB)

Authors

Hummels, David L. (Purdue U)
Schaur, Georg (U TN)

JEL Classifications

F13: Trade Policy; International Trade Organizations
F14: Empirical Studies of Trade
L93: Air Transportation


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