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Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

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  • Duranton, Gilles
  • Storper, Michael

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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4933.

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Date of creation: Feb 2005
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Handle: RePEc:cpr:ceprdp:4933

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Keywords: agglomeration; trade costs; transaction costs; transport costs; vertically linked industries;

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References

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  1. Matouschek, Niko & Robert-Nicoud, Frédéric, 2003. "The Role of Human Capital Investments in the Location Decisions of Firms," CEPR Discussion Papers 3875, C.E.P.R. Discussion Papers.
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  8. Michael Storper & Yun-chung Chen, 2002. "Trade and the location of industries in the OECD and European Union," Journal of Economic Geography, Oxford University Press, vol. 2(1), pages 73-107, January.
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