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Time Zone Differences, Communication Cost and Service Trade

Biswajit Mandal () and Alaka Prasad

MPRA Paper from University Library of Munich, Germany

Abstract: The paper explains how service trade has been facilitated because of the availability and development of Information and Communication Technology (ICT). With this, the paper points out to the budding theory of time zone (TZ) differences and trade where time zone difference between two countries evokes service trade given the availability of ICT. A general equilibrium framework is taken to explain the effect of trade across non overlapping time zones on factor prices and output. Results show a rise in wage of skilled labour and a fall in rent. The result is conditional on the assumptions of factor intensity. In case of output, the sector exploiting the time zone difference is seen to expand while the other contracts. This outcome, however is independent of the assumption of factor intensity.

Keywords: Time Zones; Outsourcing; Services; Trade (search for similar items in EconPapers)
JEL-codes: F1 F11 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-int
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