Fly the Unfriendly Skies: The role of transport costs in gravity models of trade

Title: Fly the Unfriendly Skies: The role of transport costs in gravity models of trade
Format: Journal Article
Publication Date: November 2024
Published In: Journal of International Economics
Description:

We exploit exogenous shocks to flight distances over time to estimate the distance effect in airborne trade within panel regressions. We find a negative distance effect, which we interpret as evidence of a link between transportation costs and airborne trade. Notably, this relationship is driven almost entirely by changes at the extensive margin. Specifically, trade in HS 6 product categories with intermittent trading histories becomes dormant when flight distances increase. Conversely, the intensive margin of trade remains largely unaffected.

Ivan Allen College Contributors:
External Contributors: Jing Chu and Antu Panini Murshid
Categories:
  • International Trade
Related Departments:
  • School of Economics