Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile

36 Pages Posted: 2 Aug 2019 Last revised: 15 Nov 2024

See all articles by Dong Cheng

Dong Cheng

Union College

Mario J. Crucini

Vanderbilt University - College of Arts and Science - Department of Economics; National Bureau of Economic Research (NBER)

Hyunseung Oh

Board of Governors of the Federal Reserve System

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics

Date Written: July 2019

Abstract

The early twentieth century provides a unique opportunity to explore the interaction of rapid technological progress and international trade barriers in shaping the worldwide diffusion of a new, highly traded good: the automobile. We scrape historical data from 1913 to 1940 on the quantity and value of passenger vehicles exported from the United States to 23 destination countries and measure five unique international frictions that prevented the both the pass-through of US automobile price declines from reaching foreign markets as well as much higher user costs (tariffs and excise taxes on fuel). We estimate a price and income elasticity of the demand for automobiles relative to an outside good. The price elasticity is between the macro and trade Armington elasticities reported in the contemporary literature. The estimated model captures both the vastly diverse levels of automobile adoption per capita across countries and the broad secular time trends. Relative price declines due to US technological innovation in assembly-line production and generally high international economic growth during the 1920s are reinforcing in the diffusion phase. The relative price decline abates during the 1930s while output generally collapses (through asymmetrically across nations), leading to large but heterogeneous reversals of the stocks of automobiles in most countries.

Suggested Citation

Cheng, Dong and Crucini, Mario J. and Oh, Hyunseung and Yilmazkuday, Hakan, Early 20th Century American Exceptionalism: Production, Trade and Diffusion of the Automobile (July 2019). NBER Working Paper No. w26121, Available at SSRN: https://ssrn.com/abstract=3428173

Dong Cheng (Contact Author)

Union College ( email )

807 Union Street
Schenectady, NY 12308
United States

HOME PAGE: http://www.dongcarlcheng.com

Mario J. Crucini

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States
(615) 322-7357 (Phone)
(615) 343-8495 (Fax)

HOME PAGE: http://my.vanderbilt.edu/mariocrucini/about-me/

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Hyunseung Oh

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Hakan Yilmazkuday

Florida International University (FIU) - Department of Economics ( email )

11200 SW 8th Street
Miami, FL 33199
United States

HOME PAGE: http://faculty.fiu.edu/~hyilmazk/

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