Distance, Time and Specialization

James Harrigan and Carolyn Evans

No 640, Econometric Society 2004 North American Winter Meetings from Econometric Society

Abstract: Time is money, and distance matters. We model the interaction of these truisms, and show the implications for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model, timely delivery is important because it allows retailers to respond to fluctuating final demand without holding costly inventories, and timely delivery is only possible from nearby locations. Using a unique dataset that allows us to measure the retail demand for timely delivery, we show that the sources of US apparel imports have shifted in the way predicted by the model, with products where timeliness matters increasingly imported from nearby countries.

Keywords: specialization; trade; timely delivery (search for similar items in EconPapers)
JEL-codes: F12 F14 (search for similar items in EconPapers)
Date: 2004-08-11
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Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Distance, time, and specialization (2003)
Working Paper: Distance, Time, and Specialization (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ecm:nawm04:640

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