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Timeliness, trade and agglomeration

Harrigan, James and Venables, Tony (2004) Timeliness, trade and agglomeration. CEPDP, 616. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753017180

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Abstract

An important element of the cost of distance is time taken in delivering final and intermediate goods. We argue that time costs are qualitatively different from direct monetary costs such as freight charges. The difference arises because of uncertainty. Unsynchronised deliveries can disrupt production, and delivery time can force producers to order components before demand and cost uncertainties are resolved. Using several related models we show that this can cause clustering of component production. If final assembly takes place in two locations and component production has increasing returns to scale, then component production will tend to cluster around just one of the assembly plants.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2004 the authors
Library of Congress subject classification: H Social Sciences > HF Commerce
H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System: L - Industrial Organization > L0 - General
F - International Economics > F1 - Trade
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 616
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/2300/

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