Time as a Trade Barrier
- (pp. 2935-59)
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.Citation
Hummels, David L., and Georg Schaur. 2013. "Time as a Trade Barrier." American Economic Review, 103 (7): 2935-59. DOI: 10.1257/aer.103.7.2935Additional Materials
JEL Classification
- F13 Trade Policy; International Trade Organizations
- F14 Empirical Studies of Trade
- L93 Air Transportation