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Timeliness, Trade and Agglomeration

  • James Harrigan
  • Anthony J. Venables

An important element of the cost of distance is time taken in delivering final and intermediategoods. We argue that time costs are qualitatively different from direct monetary costs such asfreight charges. The difference arises because of uncertainty. Unsynchronised deliveries candisrupt production, and delivery time can force producers to order components beforedemand and cost uncertainties are resolved. Using several related models we show that thiscan cause clustering of component production. If final assembly takes place in two locationsand component production has increasing returns to scale, then component production willtend to cluster around just one of the assembly plants.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0616.

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Date of creation: Feb 2004
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Handle: RePEc:cep:cepdps:dp0616
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. 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.
  2. N/A, 1998. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 163(1), pages 3-3, January.
  3. N/A, 1998. "The World Economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 164(1), pages 3-3, April.
  4. Hummels, David, 2001. "Time as a Trade Barrier," GTAP Working Papers 1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  5. Carolyn L. Evans & James Harrigan, 2003. "Distance, Time, and Specialization," NBER Working Papers 9729, National Bureau of Economic Research, Inc.
  6. Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
  7. Michael Storper & Anthony J. Venables, 2003. "Buzz: Face-to-Face Contact and the Urban Economy," CEP Discussion Papers dp0598, Centre for Economic Performance, LSE.
  8. John Sutton, 1986. "Non-Cooperative Bargaining Theory: An Introduction," Review of Economic Studies, Oxford University Press, vol. 53(5), pages 709-724.
  9. Anthony J. Venables, 2001. "Geography and International Inequalities: the Impact of New Technologies," CEP Discussion Papers dp0507, Centre for Economic Performance, LSE.
  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. Thomas H. Klier, 1999. "Agglomeration in the U.S. auto supplier industry," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 18-34.
  12. N/A, 1998. "The world economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 166(1), pages 3-3, October.
  13. Edward E. Leamer & Michael Storper, 2001. "The Economic Geography of the Internet Age," NBER Working Papers 8450, National Bureau of Economic Research, Inc.
  14. N/A, 1998. "The world economy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 165(1), pages 3-3, July.
  15. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
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