DP4933 Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs
Author(s): | Gilles Duranton, Michael Storper |
Publication Date: | February 2005 |
Keyword(s): | agglomeration, trade costs, transaction costs, transport costs, vertically linked industries |
JEL(s): | D23, D24, R12 |
Programme Areas: | International Trade and Regional Economics |
Link to this Page: | cepr.org/active/publications/discussion_papers/dp.php?dpno=4933 |
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.