Saving Household Production-Cum-Consumption Time: Implications for International Trade in Trash
| DOI | http://doi.org/10.1177/00157325221120711 |
| Published date | 01 February 2023 |
| Date | 01 February 2023 |
| Subject Matter | Articles |
Saving Household
Production-Cum-
Consumption Time:
Implications for
International
Trade in Trash
Ngo Van Long1
Abstract
This article revisits Kemp’s and Tran-Nam’s incorporation into trade theory
the Gossenian theme that consumption takes time. We show how the substi-
tutability between time-intensive household-produced consumption goods and
time-saving commercially produced consumption goods (which save households’
consumption and production time) together with capital accumulation can lead
to an increase in trash and international trade in trash. The applicability of the
standard gains from trade theorems is shown to be compromised by the exter-
nalities associated with international trade in trash between North and South.
Under some parameter values, South is better off under autarky than under free
trade in trash and the gains from trade by North is not sufficient to compensate
South’s loss from trade.
JEL Codes: D13, F18, F13
Keywords
Trade in trash, gains from trade, household production, externalities, North
South trade, the economics of time management
Article
Foreign Trade Review
58(1) 15–37, 2023
© 2022 Indian Institute of
Foreign Trade
Reprints and permissions:
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DOI: 10.1177/00157325221120711
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1 Department of Economics, McGill University, Montreal, Canada.
Corresponding author (deceased):
Ngo Van Long, Department of Economics, McGill University, Montreal, Quebec H3A 0B9, Canada.
E-mail: ngo.long@mcgill.ca
16 Foreign Trade Review 58(1)
Introduction
Everyone knows that consumption takes time and that different consumption
goods take different amounts of time to consume. However, standard microeco-
nomic analysis of households’ demand typically ignores the fact that consumption
is time-consuming. A major exception was the paper by Becker (1965), in which
he argued that ‘the allocation and efficiency of non-working time may now be
more important to economic welfare than that of working time’. While Becker
cited the earlier work of Mincer (1962, 1963) on this subject, he did not mention
the pioneering work of Gossen (1854, 1983) who not only pointed out that con-
sumption takes time but also emphasised the importance of consumption time
allocation across goods by individual consumers. Recently, in an interesting arti-
cle published in the Economics Letters, Kemp (2008) argued that, even in models
with just two consumption goods, if one takes account of the Gossenian time
constraint in addition to the usual budget constraint, then propositions using the
Lerner–Samuelson model of international trade (which assumes that neither good
is inferior) must be treated with reserve. Specifically, Kemp (2008) showed that if
both the financial budget constraint and the time budget constraint are binding,
then local inferiority must be accommodated even when household preferences
are homothetic.1 Kemp’s idea was further elaborated in Kemp (2009, 2018) where
the normative trade theory was re-examined under the Gossenian assumptions.
These recent papers by Kemp have inspired some authors to further explore the
implications of the time budget constraint for trade theory, see Tran-Nam (2012,
2017), and for general equilibrium theory (Le-Van et al., 2018).
In this article, combining the idea that consumption takes time with Becker’s
idea that household production takes time, I explore some implications of con-
sumers’ desire to save household’s production-cum-consumption time on the
generation of trash and on the exportation of trash from northern economies to
southern economies. Pointing out that free trade in trash involves externalities, I
cast doubt on the applicability of the standard proposition that free trade is mutu-
ally gainful. Using a simple model of North-South trade in trash, I show that there
exist parameter values such that South’s welfare under autarky is greater than
under free trade in trash, and North’s gains from trade in trash is insufficient to
compensate for South’s losses.
Some Empirical Motivation
For many goods, the act of consumption involves both preparation time and con-
sumption time. To enjoy a freshly made cup of coffee at home, a consumer must
carefully grind the coffee beans (purchased from a store), making sure that the
desired level of coarseness is attained, brew the coffee at the right water tempera-
ture (not at 100° C) and finally savour it slowly. Similarly, to eat fish, a traditional
household in Asia would buy from the market a fish that is still alive, take it home,
get rid of its scales and internal organs, slowly fry it, adding condiments and
spices in a systematic order and finally consume it leisurely with family members.
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