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Trade Variations Due to Distance and Delaying Costs across Time Zones

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  • Mandal, Biswajit
  • Das, Maitrayee

Abstract

Trade Variations Due to Distance and Delaying Costs across Time Zones Abstract This paper constructs a competitive trade model involving two nations, with distinct time zone locations. Our results suggest that geographical distance could positively impact service trade, in contrast to its harmful nature for goods trade. These results partly disagree with the gravity arguments of international trade. Our model also reveals an intriguing relationship: an increase in distance between trading nations results in higher skilled labour wages and diminished capital rent for service products, while goods trade experienced the opposite effect. We then connect distance with delaying cost and find that an escalation in delaying cost led to a decline in skilled labour wages and an increase in rent. We further extend our basic model to introduce two additional sectors—informal and Government manufacturing—along with unorganized labour and land as extra production factors. Despite these additions, the consistency in the effects on factor prices and output persists. JEL Classification: D24, E26, F1, J3, J31, O14 Key words: Trade; Time Zone; Factor prices; Output Changes; Informality: Manufacturing Sector

Suggested Citation

  • Mandal, Biswajit & Das, Maitrayee, 2024. "Trade Variations Due to Distance and Delaying Costs across Time Zones," MPRA Paper 122608, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:122608
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    References listed on IDEAS

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    8. Mandal, Biswajit, 2015. "Distance, production, virtual trade and growth: A note," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-12.
    9. Biswajit Mandal & Sugata Marjit & Hamid Beladi, 2018. "Reform, informal sector, and extortion," Economics and Politics, Wiley Blackwell, vol. 30(1), pages 106-123, March.
    10. Falvey, Rodney E, 1976. "Transport Costs in the Pure Theory of International Trade," Economic Journal, Royal Economic Society, vol. 86(343), pages 536-550, September.
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    12. Mandal, Biswajit & Das, Maitrayee, 2023. "Effects of Time Zone Related Distance on Trade: Goods vs. Service," MPRA Paper 118256, University Library of Munich, Germany.
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    More about this item

    Keywords

    Key words: Trade; Time Zone; Factor prices; Output Changes; Informality: Manufacturing Sector;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade

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