NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Distance, Time, and Specialization

Carolyn L. Evans, James Harrigan

NBER Working Paper No. 9729
Issued in May 2003
NBER Program(s):   ITI

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.

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Document Object Identifier (DOI): 10.3386/w9729

Published: Evans, Carolyn L. and James Harrigan. "Distance, Time, And Specialization: Lean Retailing In General Equilibrium," American Economic Review, 2005, v95(1,Mar), 292-313.

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