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Spatial Spillover Effects of Agricultural Transport Costs in Peru

Author

Listed:
  • Pedro Herrera-Catalán

    (Faculty of Economics and Business Administration, Universidad Autónoma de Madrid, C/Francisco Tomás y Valiente, 5, 28049 Madrid, Spain)

  • Coro Chasco

    (Department of Applied Economics, Universidad Autónoma de Madrid, C/Francisco Tomás y Valiente, 5, 28049 Madrid, Spain
    ECEMIN Research Group, Nebrija University, C/Sta. Cruz de Marcenado, 27, 28015 Madrid, Spain)

  • Máximo Torero

    (Food and Agriculture Organization (F.A.O.), Room B532, Viale delle Terme di Caracalla, 00153 Rome, Italy)

Abstract

The role of agricultural transport costs in core-periphery structures has habitually been ignored in New Economic Geography (NEG) models. This is due to the convention of treating the agricultural good as the numéraire, thus implying that agricultural transportation costs are assumed to be zero in these models. For more than three decades, this has been the standard setting in spatial equilibrium analysis. This paper examines the effects of agricultural transport costs on the spatial organisation of regional structures in Peru. In doing so, Krugman’s formulation of iceberg transport costs is modified to introduce agricultural transport costs into the dynamic of the NEG models. We use exploratory spatial flow data analysis methods and non-spatial and spatial origin-destination flow models to explore how the regional spatial structure changes when real transportation data for agricultural goods are included into the iceberg transport costs formulation. We show that agricultural transport costs generate flows that are systematically associated with flows to or from nearby regions generating thus the emergence of spatial spillovers across Peruvian regions. The results of the paper support the contention that NEG models have overshadowed the role of agricultural transport costs in determining the spatial configuration of economic activities.

Suggested Citation

  • Pedro Herrera-Catalán & Coro Chasco & Máximo Torero, 2021. "Spatial Spillover Effects of Agricultural Transport Costs in Peru," Land, MDPI, vol. 11(1), pages 1-19, December.
    • Handle: RePEc:gam:jlands:v:11:y:2021:i:1:p:58-:d:715422
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    References listed on IDEAS

    as
    1. Bernard Fingleton (ed.), 2007. "New Directions in Economic Geography," Books, Edward Elgar Publishing, number 3818, December.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    3. Picard, Pierre M. & Zeng, Dao-Zhi, 2005. "Agricultural sector and industrial agglomeration," Journal of Development Economics, Elsevier, vol. 77(1), pages 75-106, June.
    4. Bernard Fingleton & Philip McCann, 2007. "Sinking the Iceberg? On the Treatment of Transport Costs in New Economic Geography," Chapters, in: Bernard Fingleton (ed.), New Directions in Economic Geography, chapter 6, Edward Elgar Publishing.
    5. Philip McCann, 2005. "Transport costs and new economic geography," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 305-318, June.
    6. Harry Garretsen & Ron Martin, 2010. "Rethinking (New) Economic Geography Models: Taking Geography and History More Seriously," Spatial Economic Analysis, Taylor & Francis Journals, vol. 5(2), pages 127-160.
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