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Air Transportation Services: Both A Traded Commodity And A Transactions Cost In International Trade

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  • KENNETH BUTTON

    ()
    (Research Center School of Public Policy, George Mason University (MS 3C6) Fairfax, VA 22030, USA)

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    Abstract

    Air transportation is a major facilitator of international trade in terms of the value of goods and services involved, and is important to specific industries, such as tourism, that are being developed by many lower income countries. High air transportation costs can pose a major impediment to the economic growth of countries, or to regions within them. But international air transportation is also an industry in its own right that can earn profits and foreign exchange for the parenting country. The newer international trade models treat transportation as a transactions cost, reductions of which confer in most cases, a gain to trading partners. Reducing air transportation costs, if resulting from rent seeking activities in protected markets, can, however reduce income for the air transportation-providing country and may impact on its foreign exchange earnings. This can reduce the incentive for a country to participate in Open Skies type situations where international air services are offered in a competitive market. Furthermore liberal trade in air transportation services can, in some cases lead to potentially less efficient provision of these services.

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    Bibliographic Info

    Article provided by World Scientific Publishing Co. Pte. Ltd. in its journal Journal of International Commerce, Economics and Policy.

    Volume (Year): 01 (2010)
    Issue (Month): 01 ()
    Pages: 105-120

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    Handle: RePEc:wsi:jicepx:v:01:y:2010:i:01:p:105-120

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    Related research

    Keywords: Airlines; international trade; economic development; trade in services; F13; L93; O19;

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    References

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    1. El-Agraa,Ali (ed.), 2007. "The European Union," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521874434.
    2. David Greenaway & Chris R. Milner, 2006. "Recent Developments in Intra-Industry Trade: Introduction by Guest Editors," Review of World Economics (Weltwirtschaftliches Archiv), Springer, Springer, vol. 142(3), pages 425-432, October.
    3. Yamaguchi, Katsuhiro, 2008. "International trade and air cargo: Analysis of US export and air transport policy," Transportation Research Part E: Logistics and Transportation Review, Elsevier, Elsevier, vol. 44(4), pages 653-663, July.
    4. Button, Kenneth & Lall, Somik & Stough, Roger & Trice, Mark, 1999. "High-technology employment and hub airports," Journal of Air Transport Management, Elsevier, Elsevier, vol. 5(1), pages 53-59.
    5. Button, Kenneth J. & Taylor, Samantha Y, 2000. "International Air Transportation And Economic Development," ERSA conference papers ersa00p483, European Regional Science Association.
    6. Krugman, Paul R., 1979. "Increasing returns, monopolistic competition, and international trade," Journal of International Economics, Elsevier, Elsevier, vol. 9(4), pages 469-479, November.
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