Timeliness, Trade and Agglomeration
AbstractAn 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 generates hitherto unexplored incentives for clustering. 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.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10404.
Date of creation: Apr 2004
Date of revision:
Publication status: published as Harrigan, James and Anthony J. Venables. “Timeliness and Agglomeration.” Journal of Urban Economics 59 (March 2006): 300-316.
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Other versions of this item:
- James Harrigan & Tony Venables, 2004. "Timeliness, trade and agglomeration," LSE Research Online Documents on Economics 2300, London School of Economics and Political Science, LSE Library.
- James Harrigan & Anthony J. Venables, 2004. "Timeliness, Trade and Agglomeration," CEP Discussion Papers dp0616, Centre for Economic Performance, LSE.
- Harrigan, James & Venables, Anthony J., 2004. "Timeliness, Trade and Agglomeration," CEPR Discussion Papers 4294, C.E.P.R. Discussion Papers.
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-06-07 (All new papers)
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