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Time Zone Differences, Communication Cost and Service Trade

Author

Listed:
  • Mandal, Biswajit
  • Prasad, Alaka Shree

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.

Suggested Citation

  • Mandal, Biswajit & Prasad, Alaka Shree, 2018. "Time Zone Differences, Communication Cost and Service Trade," MPRA Paper 87465, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:87465
    as

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    File URL: https://mpra.ub.uni-muenchen.de/87465/1/MPRA_paper_87465.pdf
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    References listed on IDEAS

    as
    1. Bianka Dettmer, 2014. "International Service Transactions: Is Time a Trade Barrier in a Connected World?," International Economic Journal, Taylor & Francis Journals, vol. 28(2), pages 225-254, June.
    2. Matsuoka, Yuji & Fukushima, Marcelo, 2010. "Time zones, shift working and international outsourcing," International Review of Economics & Finance, Elsevier, vol. 19(4), pages 769-778, October.
    3. Toru Kikuchi & Ngo Van Long, 2011. "Shift Working And Trade In Labour Services With Time Zone Differences," Pacific Economic Review, Wiley Blackwell, vol. 16(5), pages 553-564, December.
    4. Elisabeth Christen, 2017. "Time Zones Matter: The Impact of Distance and Time Zones on Services Trade," The World Economy, Wiley Blackwell, vol. 40(3), pages 612-631, March.
    5. Head, Keith & Mayer, Thierry & Ries, John, 2009. "How remote is the offshoring threat?," European Economic Review, Elsevier, vol. 53(4), pages 429-444, May.
    6. David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-2959, December.
    7. Kikuchi, Toru & Marjit, Sugata, 2010. "Time Zones and Periodic Intra-Industry Trade," MPRA Paper 24473, University Library of Munich, Germany.
    8. Kikuchi, Toru & Iwasa, Kazumichi, 2010. "A simple model of service trade with time zone differences," International Review of Economics & Finance, Elsevier, vol. 19(1), pages 75-80, January.
    9. Noritsugu Nakanishi & Ngo Van Long, 2015. "The Distributional and Allocative Impacts of Virtual Labor Mobility across Time Zones through Communication Networks," Review of International Economics, Wiley Blackwell, vol. 23(3), pages 638-662, August.
    10. Kikuchi, Toru & Marjit, Sugata, 2011. "Growth with time zone differences," Economic Modelling, Elsevier, vol. 28(1), pages 637-640.
    11. Ronald W. Jones, 2018. "The Structure of Simple General Equilibrium Models," World Scientific Book Chapters, in: International Trade Theory and Competitive Models Features, Values, and Criticisms, chapter 4, pages 61-84, World Scientific Publishing Co. Pte. Ltd..
    12. Toru Kikuchi & Sugata Marjit & Biswajit Mandal, 2013. "Trade with Time Zone Differences: Factor Market Implications," Review of Development Economics, Wiley Blackwell, vol. 17(4), pages 699-711, November.
    13. Rebecca Tomasik, 2013. "Time zone-related continuity and synchronization effects on bilateral trade flows," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 321-342, June.
    14. repec:ebl:ecbull:v:6:y:2006:i:15:p:1-10 is not listed on IDEAS
    15. Sugata Marjit & Biswajit Mandal, 2017. "Virtual trade between separated time zones and growth," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(2), pages 171-183, June.
    16. Marjit, Sugata, 2007. "Trade theory and the role of time zones," International Review of Economics & Finance, Elsevier, vol. 16(2), pages 153-160.
    17. Biswajit Mandal & Sugata Marjit & Noritsugu Nakanishi, 2018. "Outsourcing, factor prices and skill formation in countries with non-overlapping time zones," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 8(2), pages 289-304, August.
    18. Mandal, Biswajit, 2015. "Distance, production, virtual trade and growth: A note," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-12.
    19. Head, Keith & Mayer, Thierry & Ries, John, 2009. "How remote is the offshoring threat?," European Economic Review, Elsevier, vol. 53(4), pages 429-444, May.
    20. Toru Kikuchi, 2006. "Time Zones, Outsourcing and Patterns of International Trade," Economics Bulletin, AccessEcon, vol. 6(15), pages 1-10.
    21. repec:hal:spmain:info:hdl:2441/10144 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Time Zones; Outsourcing; Services; Trade;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade

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    This paper has been announced in the following NEP Reports:

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