Abstract
Abstract This paper argues that distance is not necessarily harmful to trade. It is shown that there may be an increase in the production and volume of trade if time zones of the trading nations are non-overlapping. This implies a positive effect of distance on the volume of trade in general and virtual trade in particular. It is also shown that exploitation of time zone differences raises welfare and ensures capital accumulation. The paper builds on the emerging literature on time zones and pure theory of international trade.
Highlights
Physical distance between trading nations restricts trade
It has been shown that time zone exploitation directly raises production and volume of trade in general and virtual trade in particular
Virtual trade is defined as trade in intermediate or final services, which is essentially trade in labor services of different countries
Summary
Physical distance between trading nations restricts trade. In regard to the volume of trade in tangible goods or services requiring the physical presence of the supplier, there exists no room whatsoever for any further clarification. It has been shown that for a negligible shipment cost (communication revolution made that possible), trade is gainful across different time zones Even though he did not use any such identifying terminologies for service trade that takes advantage of the non-overlapping time zones, it should be noted that the kind of trade the author stressed is absolutely virtual in nature. Here I strive to add some value to the existing material, which is yet to be highly researched In doing this I attempt to relate physical distance influencing (non)overlapping time zones between two trading partners with virtual trade. Notice that this kind of trade became a central issue of research only after the information technology revolution.
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