Abstract

http://ssrn.com/abstract=1722423
 
 

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The Economics of Cross-Border Travel


Ambarish Chandra


University of Toronto - Rotman School of Management

Keith Head


University of British Columbia (UBC) - Division of Strategy and Business Economics

Mariano E. Tappata


University of British Columbia - Sauder School of Business, Strategy and Business Economics Division

April 4, 2013


Abstract:     
We model the decision to travel across an international border as a trade-off between benefits derived from buying a range of products at lower prices and the costs of travel. Using micro-data on Canada-US travel, we structurally estimate this model. Price differences motivate cross-border travel; a 10% home appreciation raises the propensity to cross by 8% to 26%. The larger elasticity arises when the home currency is strong, a result predicted by the model. Distance to the border strongly inhibits crossings, with an implied cost of 87 cents/mile. Geographic differences can partially explain why American travel is less exchange-rate responsive.

Number of Pages in PDF File: 42

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Date posted: December 9, 2010 ; Last revised: April 7, 2013

Suggested Citation

Chandra, Ambarish and Head, Keith and Tappata, Mariano E., The Economics of Cross-Border Travel (April 4, 2013). Available at SSRN: http://ssrn.com/abstract=1722423 or http://dx.doi.org/10.2139/ssrn.1722423

Contact Information

Ambarish Chandra (Contact Author)
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
Keith Head
University of British Columbia (UBC) - Division of Strategy and Business Economics ( email )
2053 Main Mall
Vancouver, British Columbia
Canada
HOME PAGE: http://strategy.sauder.ubc.ca/head/
Mariano E. Tappata
University of British Columbia - Sauder School of Business, Strategy and Business Economics Division ( email )
2053 Main Mall
Vancouver B.C., BC V6T-1Z2
Canada
1 (604) 822 8355 (Phone)
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