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Early 20th century American exceptionalism: Production, trade and diffusion of the automobile

Dong Cheng, Mario Crucini (), Hyunseung Oh and Hakan Yilmazkuday ()

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The beginning of the twentieth century provides a unique opportunity to explore the interaction of rapid technological progress and trade barriers in shaping the worldwide diffusion of a new, highly traded good: the automobile. We scrape historical data on the quantity and value of passenger vehicles exported from the United States to other destination countries, annually from 1913 to 1940. We model the rise of US automobile from global obscurity toward a level dependent upon the extent of long-run pass-through of US prices into destination markets and destination GDP per capita. The results based on a diffusion model with CES preferences and non-unitary income elasticity shows that 62% of the gap in diffusion levels between the U.S. and the rest of the world is due to price frictions such as markups, tariffs, and trade costs, while the remaining 38% is due to income effects.

Keywords: Product Diffusion; Automobile; International Trade; Wedge Accounting (search for similar items in EconPapers)
JEL-codes: F10 L62 N60 N70 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-his, nep-int and nep-tre
Date: 2019-08
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Working Paper: Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile (2019) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-58

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