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

Author

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  • KENNETH BUTTON

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

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.

Suggested Citation

  • Kenneth Button, 2010. "Air Transportation Services: Both A Traded Commodity And A Transactions Cost In International Trade," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 1(01), pages 105-120.
    • Handle: RePEc:wsi:jicepx:v:01:y:2010:i:01:n:s1793993310000093
    DOI: 10.1142/S1793993310000093
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    Citations

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    Cited by:

    1. Brugnoli, Alberto & Dal Bianco, Antonio & Martini, Gianmaria & Scotti, Davide, 2018. "The impact of air transportation on trade flows: A natural experiment on causality applied to Italy," Transportation Research Part A: Policy and Practice, Elsevier, vol. 112(C), pages 95-107.
    2. Button, Kenneth & Brugnoli, Alberto & Martini, Gianmaria & Scotti, Davide, 2015. "Connecting African urban areas: airline networks and intra-Sub-Saharan trade," Journal of Transport Geography, Elsevier, vol. 42(C), pages 84-89.
    3. Button, Kenneth & Martini, Gianmaria & Scotti, Davide & Volta, Nicola, 2019. "Airline regulation and common markets in Sub-Saharan Africa," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 129(C), pages 81-91.

    More about this item

    Keywords

    Airlines; international trade; economic development; trade in services; F13; L93; O19;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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