Duranton, Gilles and Storper, Michael (2005) Rising trade costs?: agglomeration and trade with endogenous transaction costs. CEPDP, 683. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753018225
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While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade.
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