A simple model of time zone differences, virtual trade and informality

Biswajit Mandal and Alaka Prasad

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we attempt to model virtual trade resulting from time zone differences in an otherwise Heckscher-Ohlin set up which is absent in the literature. So, this paper tries to add some value to the existing stuff on the trade theory and the role of time zones. In doing so, it has been proved that exploitation of time zone difference benefits skilled labor only under reasonable assumption. Contrarily, in output font, time zone difference exploiting sector expands and the other sector contracts irrespective of any factor intensity assumption. The model has been extended to examine how distance may also lead to similar outcomes. In addition, the model is further extended to explore the effect of virtual trade on an economy also endowed with a huge supply of unskilled labor causing the occurrence of informality and associated corruption. Interestingly trade turns out to be beneficial to unskilled workers and lead to a fall in the number of workers engaged in corrupt activities in the economy though the informal sector expands.

Keywords: Trade; Time Zone; Factor Prices; Informality; Corruption (search for similar items in EconPapers)
JEL-codes: D73 E26 F1 F11 J31 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-int, nep-iue and nep-mac
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Related works:
Journal Article: A simple model of time zone differences, virtual trade and informality (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:96953

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