Cross-border Trips by Canadians and Americans and the Differential Impact of the Border

Same day automobile trips have been used as a barometer of cross-border shopping between Canada and the United States. The determinants of same day automobile crossborder trips by Canadians and Americans are examined using regression analysis and the results find that key determinants are lagged trips, per capita income, the real exchange rate and seasonal factors. The coefficient on lagged trips is larger for Canada than for the United States suggesting that, over time, Canadians adjust more rapidly to the desired number of trips than Americans. More intriguing is the fact that while income is positive for Canadian same day auto trips to the United States, it is negative for American same day auto trips to Canada. This implies that cross-border trips are normal goods for Canadians but inferior goods for Americans. The Canada-U.S. border is thus viewed differently by residents depending on which side they happen to live on and exercises a differential impact on cross-border trips