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Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

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Listed author(s):
  • Duranton, Gilles
  • Storper, Michael

Abstract

While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4933.

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Date of creation: Feb 2005
Handle: RePEc:cpr:ceprdp:4933
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Keywords: agglomeration; trade costs; transaction costs; transport costs; vertically linked industries;

Other versions of this item:

Find related papers by JEL classification:
  • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
  • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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