The not so distant effect of distance within a time zone

Abstract

This article extends the distance and time zone trade literature by examining the impact on trade of larger distance within a time zone between a country pair. Although countries cannot control the physical distance between them and other countries, they do have some control over the time zone difference. We find the quartile for distance within each time zone difference and use these to create conditional distance quartiles which measure the overall impact of falling in the 25th–90th quartile for distance, given the time zone difference. We find that a larger distance within a time zone comes at an additional cost. For trade purposes, countries that could move from the 90th to the 25th conditional quartile for distance by increasing their time zone difference by two hours are better off doing so.