Distance, Time, and Specialization

40 Pages Posted: 1 Jun 2003 Last revised: 2 Nov 2010

See all articles by Carolyn L. Evans

Carolyn L. Evans

Intel Corporation

James Harrigan

University of Virginia - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: May 2003

Abstract

Time is money, and distance matters. We model the interaction of these truisms, and show the implications for global specialization and trade: products where timely delivery is important will be produced near the source of final demand, where wages will be higher as a result. In the model, timely delivery is important because it allows retailers to respond to fluctuating final demand without holding costly inventories, and timely delivery is only possible from nearby locations. Using a unique dataset that allows us to measure the retail demand for timely delivery, we show that the sources of US apparel imports have shifted in the way predicted by the model, with products where timeliness matters increasingly imported from nearby countries.

Suggested Citation

Evans, Carolyn L. and Harrigan, James, Distance, Time, and Specialization (May 2003). NBER Working Paper No. w9729. Available at SSRN: https://ssrn.com/abstract=410655

Carolyn L. Evans

Intel Corporation ( email )

United States

James Harrigan (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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