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Title	Time as a trade barrier
Record ID	24442
Personal Name Creator	Hummels, David
Corporate Contributor	Purdue University
Publisher	CIBERWeb
Publication Date	20010700
Abstract	International trade occurs in physical space and moving goods requires time. This paper examines the importance of time as a trade barrier, estimates the magnitude of time costs, and relates these to patterns of trade and the international organization of production. Estimates indicate that each additional day spent in transport reduces the probability that the US will source from that country by 1 1.5 percent. Conditional on exporting country, estimates directly identify a willingness-to-pay for time savings using variation across exporters and commodities in the relative price / speed tradeoff for air and ocean shipping. Each day saved in shipping time is worth 0.8 percent ad-valorem for manufactured goods. Relative declines over time in air shipping prices make timesavings less expensive, providing a compelling explanation for aggregate trade growth, compositional effects in trade growth, as well as growth in time-intensive forms of integration such as vertical specialization. Specifically, the advent of fast transport (air shipping and faster ocean vessels) is equivalent to reducing tariffs on manufactured goods from 32% to 9% between 1950-1998. References, tables, 40 p.
TRT Terms	Transportation modes ; Economic factors ; Freight traffic ; Ocean shipping ; Air cargo ; Factor analysis
General Subjects	Time costs; Trade barriers
Classification	NTL - AVIATION - Aviation Economics and Finance; NTL - MARINE/WATERWAYS TRANSPORTATION - Marine Economics and Finance; NTL - FREIGHT - Freight Economics and Finance
Resource type	Research Paper
URL	http://ntl.bts.gov/lib/24000/24400/24442/00-007Hummels2.pdf
Format	PDF
Language:	English
Database	NTL Digital Repository

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