← Search

The Economics of Cross-Border Travel

Ambarish Chandra¹; Keith Head^2,3; Mariano Tappata³

¹ University of Toronto · ² Center for Economic and Policy Research · ³ University of British Columbia

We model the decision to travel across an international border as a trade-off between benefits derived from buying a range of products at lower prices and the costs of travel. We estimate the model using microdata on Canada–United States travel. Price differences motivate cross-border travel; a 10% home appreciation raises the propensity to cross by 8% to 26%. The larger elasticity arises when the home currency is strong, a result predicted by the model. Distance to the border strongly inhibits crossings, with an implied cost of 87 cents per mile. Geographic differences can partially explain why American travel is less exchange rate responsive.

DOI

10.1162/rest_a_00404

Volume

96 (4)

Pages

648-661

Language

en

Export

BibTeX

Sources

openalex crossref