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Ice(berg) Transport Costs

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  • Maarten Bosker
  • Eltjo Buringh

Abstract

Iceberg transport costs are one of the main ingredients of modern trade and economic geography models: transport costs are modelled by assuming that a fraction of the goods shipped “melts in transit”. In this paper, we investigate whether the iceberg assumption applies to the costs of transporting the only good that literally melts in transit: ice. Using detailed information on Boston’s nineteenth-century global ice trade, we show that ice(berg) transport costs in practice were a combination of a true ad-valorem iceberg cost: melt in transit, and freight, (off)loading and insurance costs. The physics of the melt process and the practice of insulating the ice in transit imply an immediate violation of the iceberg assumption: shipping ice is subject to economies scale.

Suggested Citation

  • Maarten Bosker & Eltjo Buringh, 2018. "Ice(berg) Transport Costs," CESifo Working Paper Series 6881, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_6881
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    References listed on IDEAS

    as
    1. George Alessandria & Joseph P. Kaboski & Virgiliu Midrigan, 2010. "Inventories, Lumpy Trade, and Large Devaluations," American Economic Review, American Economic Association, vol. 100(5), pages 2304-2339, December.
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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. What’s an “iceberg commuting cost”?
      by jdingel in Trade Diversion on 2019-10-28 18:14:15

    More about this item

    Keywords

    iceberg transport costs; nineteenth-century Boston ice trade;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • N51 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - U.S.; Canada: Pre-1913

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