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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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Citations

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Cited by:
  1. Frédéric Robert-Nicoud, 2006. "Off-Shoring of Business Services and De-Industrialization: Threat or Opportunity - and for Whom?," CEP Discussion Papers dp0734, Centre for Economic Performance, LSE.
  2. Stephen Redding, 2009. "Economic geography: a review of the theoretical and empirical literature," LSE Research Online Documents on Economics 25500, London School of Economics and Political Science, LSE Library.
  3. S. Gruber & L. Marattin, 2009. "Taxation, Infrastructure, and Endogenous Trade Costs in New Economic Geography," Working Papers 668, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Head, Keith & Mayer, Thierry, 2013. "What separates us? Sources of resistance to globalization," CEPR Discussion Papers 9614, C.E.P.R. Discussion Papers.
  5. Noblet, Sandrine & Belgodere, Antoine, 2010. "Coordination cost and the distance puzzle," MPRA Paper 27502, University Library of Munich, Germany.
  6. Stefan Gruber & Luigi Marattin, 2007. "No Taxation without Infrastructure," Working Paper Series 11-07, The Rimini Centre for Economic Analysis, revised Jul 2007.
  7. Stephen Redding, 2009. "Economic Geography: A Review of the Theoretical and Empirical Literature," CEP Discussion Papers dp0904, Centre for Economic Performance, LSE.
  8. Cristea, Anca D., 2011. "Buyer-Seller Relationships in International Trade: Evidence from U.S. States' Exports and Business-Class Travel," MPRA Paper 30347, University Library of Munich, Germany.
  9. Olaf Jonkeren & Erhan Demirel & Jos van Ommeren & Piet Rietveld, 2011. "Endogenous transport prices and trade imbalances," Journal of Economic Geography, Oxford University Press, vol. 11(3), pages 509-527, May.
  10. Larch, Mario & Norbäck, Pehr-Johan & Sirries, Steffen & Urban, Dieter, 2013. "Heterogeneous Firms, Globalization and the Distance Puzzle," Working Paper Series 957, Research Institute of Industrial Economics.
  11. Elisaveta Archanskaia & Guillaume Daudin, 2012. "Heterogeneity and the Distance Puzzle," Documents de Travail de l'OFCE 2012-17, Observatoire Francais des Conjonctures Economiques (OFCE).
  12. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.
  13. repec:dgr:uvatin:2008088 is not listed on IDEAS
  14. Steven Bond-Smith, 2012. "A Regional Model of Endogenous Growth with Creative Destruction," Working Papers in Economics 12/02, University of Waikato, Department of Economics.
  15. Florence Kondylis, 2005. "Agricultural Returns and Conflict: Quasi-Experimental Evidence from a Policy Intervention Programme in Rwanda," CEP Discussion Papers dp0709, Centre for Economic Performance, LSE.

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