Download this Paper Open PDF in Browser

The Economics of Cross-Border Travel

42 Pages Posted: 9 Dec 2010 Last revised: 7 Apr 2013

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

Multiple version iconThere are 2 versions of this paper

Date Written: 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.

Suggested Citation

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

Ambarish Chandra (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
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)

Paper statistics

Downloads
163
Rank
153,695
Abstract Views
1,133