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The New Economics Of Distance: Long-Term Trends In Indexes Of Spatial Friction

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Author Info

  • Ward, William A.
  • Bhattarai, Madhusudan
  • Huang, Pei

Abstract

Distance-related costs have changed at different rates across categories of resource flows and across modes and media between 1960 and 1998. The cost of moving knowledge/information has dropped much faster than the costs of moving people or materials. The costs of processing and moving information have dropped by 98% and 92% respectively, in real terms since 1960. In addition, there are big differences in the rates of change within the real costs of moving people using different travel modes--just as big differences exist within the real costs of moving materials using different modes. For example, the real costs of moving materials by domestic rail and inland waterway have decreased by 58% and 42% in real terms, respectively, while inter-city trucking costs have not changed significantly in real terms since 1960. Thus, this paper suggests that the 'new economics of distance' is not about the disappearance of distance nor the demise of borders as factors in economics. Rather, 'the new economics of distance' is about the increasing role played by logistics management and the adjustment processes that are occurring as firms creatively seek to substitute between types of resources and between the modes and media for moving those resources.

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Bibliographic Info

Paper provided by Clemson University, Department of Agricultural and Applied Economics in its series Working Papers with number 18808.

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Date of creation: 1999
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Handle: RePEc:ags:cuaewp:18808

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Postal: Clemson, SC 29634-0355
Web page: http://cherokee.agecon.clemson.edu/welcome9.htm
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Related research

Keywords: Industrial Organization;

References

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  1. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  2. Donald R. Davis, 1997. "The Home Market, Trade and Industrial Structure," Harvard Institute of Economic Research Working Papers 1800, Harvard - Institute of Economic Research.
  3. Jun Ishii & Kei-Mu Yi, 1997. "The growth of world trade," Research Paper 9718, Federal Reserve Bank of New York.
  4. Charles Engel & John H. Rogers, 1994. "How Wide is the Border?," NBER Working Papers 4829, National Bureau of Economic Research, Inc.
  5. Isard, Peter, 1977. "How Far Can We Push the "Law of One Price"?," American Economic Review, American Economic Association, vol. 67(5), pages 942-48, December.
  6. Sazanami, Yoko & Kimura, Fukunari & Kawai, Hiroki, 1997. "Sectoral Price Movements under the Yen Appreciation," Journal of the Japanese and International Economies, Elsevier, vol. 11(4), pages 611-641, December.
  7. Bertrand M. Roehner, 1996. "The Role of Transportation Costs in the Economics of Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 339-353.
  8. Harrigan, James, 1993. "OECD imports and trade barriers in 1983," Journal of International Economics, Elsevier, vol. 35(1-2), pages 91-111, August.
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Cited by:
  1. Herdt, Robert W., 2001. "Changing Priorities for International Agricultural Research," Distinguished Economist Lectures 7659, CIMMYT: International Maize and Wheat Improvement Center.
  2. Ward, William A., 2000. "Globalization and Its Implications: The Size and Location of Manufacturing Sector Export Firms in South Carolina," Working Papers 112957, Clemson University, Center for International Trade.

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