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.