IDEAS home Printed from https://ideas.repec.org/p/ehl/lserod/2300.html
   My bibliography  Save this paper

Timeliness, trade and agglomeration

Author

Listed:
  • Harrigan, James
  • Venables, Tony

Abstract

An important element of the cost of distance is time taken in delivering final and intermediate goods. We argue that time costs are qualitatively different from direct monetary costs such as freight charges. The difference arises because of uncertainty. Unsynchronised deliveries can disrupt production, and delivery time can force producers to order components before demand and cost uncertainties are resolved. Using several related models we show that this can cause clustering of component production. If final assembly takes place in two locations and component production has increasing returns to scale, then component production will tend to cluster around just one of the assembly plants.

Suggested Citation

  • Harrigan, James & Venables, Tony, 2004. "Timeliness, trade and agglomeration," LSE Research Online Documents on Economics 2300, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:2300
    as

    Download full text from publisher

    File URL: http://eprints.lse.ac.uk/2300/
    File Function: Open access version.
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 551-575.
    2. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
    3. Carolyn L. Evans & James Harrigan, 2003. "Distance, time, and specialization," International Finance Discussion Papers 766, Board of Governors of the Federal Reserve System (U.S.).
    4. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
    5. J. Vernon Henderson, Zmarak Shalizi, and Anthony J. Venables, 2001. "Geography and development," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 81-105, January.
    6. David L. Hummels & Georg Schaur, 2013. "Time as a Trade Barrier," American Economic Review, American Economic Association, vol. 103(7), pages 2935-2959, December.
    7. Anthony Venables, 2001. "Geography and International Inequalities: The Impact of New Technologies," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 135-159, June.
    8. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    9. Edward E Leamer & Michael Storper, 2001. "The Economic Geography of the Internet Age," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 32(4), pages 641-665, December.
    10. Cremer, Jacques, 1995. "Towards an economic theory of incentives in just-in-time manufacturing," European Economic Review, Elsevier, vol. 39(3-4), pages 432-439, April.
    11. John Sutton, 1986. "Non-Cooperative Bargaining Theory: An Introduction," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(5), pages 709-724.
    12. Thomas H. Klier, 1999. "Agglomeration in the U.S. auto supplier industry," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q I), pages 18-34.
    13. Hummels, David, 2001. "Time As A Trade Barrier," Working papers 28701, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gilles Duranton & Michael Storper, 2008. "Rising trade costs? Agglomeration and trade with endogenous transaction costs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 41(1), pages 292-319, February.
    2. Liu, Xiaoyun & Xin, Xian, 2011. "Transportation uncertainty and international trade," Transport Policy, Elsevier, vol. 18(1), pages 156-162, January.
    3. Kimura, Fukunari & Takahashi, Yuya & Hayakawa, Kazunobu, 2007. "Fragmentation and parts and components trade: Comparison between East Asia and Europe," The North American Journal of Economics and Finance, Elsevier, vol. 18(1), pages 23-40, February.
    4. Harrigan, James, 2010. "Airplanes and comparative advantage," Journal of International Economics, Elsevier, vol. 82(2), pages 181-194, November.
    5. John Whalley & Xian Xin, 2007. "Regionalization, Changes in Home Bias, and the Growth of World Trade," NBER Working Papers 13023, National Bureau of Economic Research, Inc.
    6. Thia, Jang Ping, 2008. "Why capital does not migrate to the south: a new economic geography perspective," LSE Research Online Documents on Economics 28508, London School of Economics and Political Science, LSE Library.
    7. Santiso, Javier & Blázquez, Jorge & Rodríguez, Javier, 2006. "Angel or demon?: China's trade impact on Latin American countries," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    8. Jang Ping Thia, 2008. "Why Capital does not Migrate to the South: A New Economic Geography Perspective," CEP Discussion Papers dp0895, Centre for Economic Performance, LSE.
    9. Mateus Silva Chang, 2017. "Machinery production networks in Latin America: a quantity and quality analysis," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 26(1), pages 1-35, December.
    10. Honggue Lee, 2008. "Agglomeration and Growth," Korean Economic Review, Korean Economic Association, vol. 24, pages 425-457.
    11. Thomas Orliac, 2012. "The economics of trade facilitation [L'économie de la facilitation des échanges]," SciencePo Working papers Main tel-03681980, HAL.
    12. David Hummels, 2007. "Transportation Costs and International Trade in the Second Era of Globalization," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 131-154, Summer.
    13. Gamberoni, Elisa & Lanz, Rainer & Piermartini, Roberta, 2010. "Timeliness and contract enforceability in intermediate goods trade," Policy Research Working Paper Series 5482, The World Bank.
    14. Nordås, Hildegunn Kyvik & Piermartini, Roberta, 2004. "Infrastructure and trade," WTO Staff Working Papers ERSD-2004-04, World Trade Organization (WTO), Economic Research and Statistics Division.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Harrigan, James & Venables, Anthony J., 2006. "Timeliness and agglomeration," Journal of Urban Economics, Elsevier, vol. 59(2), pages 300-316, March.
    2. Stephen Redding & Anthony J. Venables, 2002. "The Economics of Isolation and Distance," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 28, pages 93-108.
    3. Anthony J. Venables, 2008. "Rethinking Economic Growth in a Globalizing World," World Bank Publications - Books, The World Bank Group, number 28041, December.
    4. Adelheid Holl & Rafael Pardo & Ruth Rama, 2010. "Just-in-Time Manufacturing Systems, Subcontracting and Geographic Proximity," Regional Studies, Taylor & Francis Journals, vol. 44(5), pages 519-533.
    5. Nordås, Hildegunn Kyvik, 2003. "Fragmented production: Regionalization of trade?," WTO Staff Working Papers ERSD-2003-01, World Trade Organization (WTO), Economic Research and Statistics Division.
    6. Fink, Carsten & Mattoo, Aaditya & Neagu, Ileana Cristina, 2005. "Assessing the impact of communication costs on international trade," Journal of International Economics, Elsevier, vol. 67(2), pages 428-445, December.
    7. Miren Lafourcade & Jacques-François Thisse, 2011. "New Economic Geography: The Role of Transport Costs," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 4, Edward Elgar Publishing.
    8. C. Duvivier & S. Li & M.-F. Renard, 2013. "Are workers close to cities paid higher nonagricultural wages in rural China?," Applied Economics, Taylor & Francis Journals, vol. 45(30), pages 4308-4322, October.
    9. Thomas de Graaff & Frank G. van Oort & Raymond J.G.M. Florax, 2012. "Regional Population–Employment Dynamics Across Different Sectors Of The Economy," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 60-84, February.
    10. Pauline Bourgeon & Jean-Charles Bricongne & Guillaume Gaulier, 2012. "Financing time to trade: Evidence from French firms," Post-Print halshs-00677343, HAL.
    11. Charles J. Kenny, 2002. "The Internet and Economic Growth in Least Developed Countries: A Case of Managing Expectations?," WIDER Working Paper Series DP2002-75, World Institute for Development Economic Research (UNU-WIDER).
    12. Mayer, Thierry & Pierre-Phillippe Combes & Miren Lafourcade, 2003. "Can Business and Social Networks Explain the Border Effect Puzzle?," Royal Economic Society Annual Conference 2003 150, Royal Economic Society.
    13. Stephen J. Redding, 2013. "Economic Geography: A Review of the Theoretical and Empirical Literature," Palgrave Macmillan Books, in: Daniel Bernhofen & Rod Falvey & David Greenaway & Udo Kreickemeier (ed.), Palgrave Handbook of International Trade, chapter 16, pages 497-531, Palgrave Macmillan.
    14. Nicholas Crafts & Anthony Venables, 2003. "Globalization in History.A Geographical Perspective," NBER Chapters, in: Globalization in Historical Perspective, pages 323-370, National Bureau of Economic Research, Inc.
    15. Shepherd, Ben, 2009. "Speed Money: Time, Corruption, and Trade," MPRA Paper 17337, University Library of Munich, Germany.
    16. Carolyn L. Evans & James Harrigan, 2003. "Distance, time, and specialization," International Finance Discussion Papers 766, Board of Governors of the Federal Reserve System (U.S.).
    17. Frank Pisch, 2020. "Managing global production: theory and evidence from just-in-time supply chains," CEP Discussion Papers dp1689, Centre for Economic Performance, LSE.
    18. Christian Catalini & Christian Fons-Rosen & Patrick Gaulé, 2020. "How Do Travel Costs Shape Collaboration?," Management Science, INFORMS, vol. 66(8), pages 3340-3360, August.
    19. Sylvie Charlot & Riccardo Crescenzi & Antonio Musolesi, 2014. "Augmented and Unconstrained: revisiting the Regional Knowledge Production Function," SEEDS Working Papers 2414, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Aug 2014.
    20. Junjie Hong & Shihe Fu, 2011. "Information and Communication Technologies and the Geographical Concentration of Manufacturing Industries," Urban Studies, Urban Studies Journal Limited, vol. 48(11), pages 2339-2354, August.

    More about this item

    Keywords

    Just- in-time; clustering; location; trade.;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • F1 - International Economics - - Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ehl:lserod:2300. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: LSERO Manager (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.