The role of direct flights in trade costs
Demet Yilmazkuday and
Hakan Yilmazkuday
No 179, Globalization Institute Working Papers from Federal Reserve Bank of Dallas
Abstract:
The role of direct flights in trade costs is investigated by introducing and using a micro price data set on 49 goods across 433 international cities covering 114 countries. It is shown that having at least one direct flight reduces trade costs by about 1,400 miles in distance equivalent terms, while an international border increases trade costs by about 14,907 miles; hence, the positive effects of having at least one direct flight between any two cities can compensate for about 10% of the negative effects of an average international border. Trade costs also decrease with the number of direct flights: on average, one direct flight reduces trade costs by about 305 miles in distance equivalent terms, which corresponds to 7% of the average distance and can compensate for about 2% of the negative effects of an average international border. The results are shown to be robust to alternative empirical strategies.
Keywords: economic integration; foreign exchange (search for similar items in EconPapers)
JEL-codes: F15 F31 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2014-05-13
New Economics Papers: this item is included in nep-int and nep-opm
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Citations: View citations in EconPapers (5)
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Related works:
Journal Article: The role of direct flights in trade costs (2017) 
Working Paper: The Role of Direct Flights in Trade Costs (2016) 
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddgw:179
DOI: 10.24149/gwp179
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