Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/297885 
Year of Publication: 
2021
Series/Report no.: 
Working Paper No. 2021-03
Publisher: 
Prague University of Economics and Business, Faculty of International Relations (FIR), Prague
Abstract: 
Aeroplanes are a fast but expensive means of shipping goods, which allow producers to respond quickly to favourable demand realisations and to limit the risk of shipping unproÖtably large quantities during low demand periods while substantially raising the transportation cost relative to ocean cargoes. We explore the role of heterogeneous income elasticity of demand faced by exporters of quality-differentiated goods in shaping the transport mode choice. We find that more considerable demand volatility induces more exporters to opt for air shipping, and more so if they produce high-quality goods. We also produce supporting evidence based on U.S. data at the exporter-district-product level.
Subjects: 
International trade
Transportation mode
Unit values
PIGL utility function
JEL: 
F1
F14
Document Type: 
Working Paper

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