With the growing development in communication technology and increased fragmentation of production process, services that were once considered non-tradable can now be traded across different nations. In this respect, trading countries located in different time zones of the world with non-overlapping working hours are able to develop a comparative advantage together for the supply of these services. Disintegrating the production of a service across different time zones can allow the production to be completed efficiently and make the product available in the market meeting consumer demand in a timely fashion. In this paper, we have reviewed some of important research that has been conducted in the area of time zone differences and trade. This type of trade further affects the factor market and production patterns of the involved countries and has also been significant for their growth and welfare.

To combat COVID-19 the entire world has resorted to global lockdown implying restriction on international labor migration and trade. This paper aims to check the effect of such restrictions on the unemployment of unskilled labor in the source country. In competitive general equilibrium framework with three goods and four factors, restriction on migration raises unemployment for given factor intensity. The results remain same even in a slightly different structure of the economy. In case of trade restriction, however, the rise or fall in unemployment depends on both the structure of the economy and the factor intensity assumption.

Purpose This paper aims to strive to model virtual trade resulting from time zone differences in an otherwise Heckscher–Ohlin set up which is absent in the literature. So, the paper adds some value to the existing literature on time zones (TZ) and trade. Design/methodology/approach A competitive general equilibrium model is developed first to capture the effect of TZ differences on virtual trade. Then the authors examine, in brief, if distance can be accommodated in such framework. Finally, the authors extend the model to incorporate informality. Findings It is seen that exploitation of time zone difference benefits skilled labor and hurts capital under reasonable assumption. In what follows, time zone difference exploiting sector expands, whereas the other sector contracts. Then, the model has been extended to examine how distance may also lead to similar outcomes. In addition, the model is further modified to explore the effect of virtual trade in an informality and associated extortion ridden economy. Interestingly, virtual trade turns out to be beneficial to unskilled workers as well, and leads to a fall in the number of extortionists, though informal production is augmented. Research limitations/implications This model is a competitive model that may not clearly reflect the realistic world. However, interestingly this may form the basis of looking into some other appealing dimensions of the real world. Originality/value TZ and related communication-cost-driven trade arguments are relatively less explored theoretically. Therefore, the work adds some value to the theoretical understanding of outsourcing in service trade that uses day-night differences across the globe.

This paper uses competitive general equilibrium model of trade for small open economy with informal sector to check the possible effects of virtual trade. We show that skilled labors and educational capital owners benefit from virtual trade. The service sector expands while the formal and informal sector contract along with the number of people engaged in corruption-related intermediation. Following this, we also check the effect of a fall in the extent of cost of corruption. Results show an increase in unskilled wage and outflow of educational capital thus hurting the skill-intensive sector. We proceed further to club the effects of both virtual trade and fall in intermediation cost, and explore the consequences. Though, both skilled and unskilled labors benefit, the effect on output and intermediators, however, is ambiguous. We then modify the basic model to endogenize the cost of corruption, include punishment aspect of intermediators, etc. In this case, owing to time zone difference exploitation, we experience an increase in wage of both types of labor, an expansion of the service sector and contraction of the informal sector. Interestingly, the cost of intermediation rises while the number of intermediators falls in the extended model.

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