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Transportation Costs and the Spatial Organization of Economic Activity

  • Stephen J. Redding
  • Matthew A. Turner

This paper surveys the theoretical and empirical literature on the relationship between the spatial distribution of economic activity and transportation costs. We develop a multi-region model of economic geography that we use to understand the general equilibrium implications of transportation infrastructure improvements within and between locations for wages, population, trade and industry composition. Guided by the predictions of this model, we review the empirical literature on the effects of transportation infrastructure improvements on economic development, paying particular attention to the use of exogenous sources of variation in the construction of transportation infrastructure. We examine evidence from different spatial scales, between and within cities. We outline a variety of areas for further research, including distinguishing reallocation from growth and dynamics.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1277.

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Date of creation: Jun 2014
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Handle: RePEc:cep:cepdps:dp1277
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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