On Modeling Transport Costs
The interpretation of the loss of utility as transport costs in address models of differentiation poses a methodological difficulty. Transport costs implicitly amounts to assume that there is a good neither included in the differentiated sector nor in the composite (numeraire) good of the economy. We propose to use iceberg-type transport costs to solve this difficulty.
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- Abdel-Rahman, Hesham M., 1994. "Economies of scope in intermediate goods and a system of cities," Regional Science and Urban Economics, Elsevier, vol. 24(4), pages 497-524, August.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-99, June.
- Samuelson, Paul A, 1983. "Thunen at Two Hundred," Journal of Economic Literature, American Economic Association, vol. 21(4), pages 1468-88, December.
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