Rising trade costs? Agglomeration and trade with endogenous transaction costs

Duranton, Gilles and Storper, Michael ORCID: 0000-0002-8354-792X (2008) Rising trade costs? Agglomeration and trade with endogenous transaction costs. Canadian Journal of Economics, 41 (1). 292 - 319. ISSN 0008-4085

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Abstract

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 that seeks to replicate features from the machinery industry, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade. The subtle relationship between (endogenous) transport costs and the sensitivity of trade to distance is also explored.

Item Type:	Article
Official URL:	https://onlinelibrary.wiley.com/journal/15405982
Additional Information:	© 2008 Canadian Economics Association
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HF Commerce
JEL classification:	D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights R - Urban, Rural, and Regional Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade
Date Deposited:	31 Jan 2011 15:42
Last Modified:	05 Jan 2024 01:30
URI:	http://eprints.lse.ac.uk/id/eprint/31926

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