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Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

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  • Gilles Duranton
  • Michael Storper

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, 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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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0683.

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Date of creation: Apr 2005
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Handle: RePEc:cep:cepdps:dp0683

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Transaction costs; trade costs; transport costs; agglomeration; vertically linkedindustries;

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References

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