Rising trade costs? Agglomeration and trade with endogenous transaction costs
Duranton, G. & Storper, M.
(2005).
Rising trade costs? Agglomeration and trade with endogenous transaction costs.
(CEP Discussion Paper 683).
London School of Economics and Political Science. Centre for Economic Performance.
(2005).
Rising trade costs? Agglomeration and trade with endogenous transaction costs.
(CEP Discussion Paper 683).
London School of Economics and Political Science. Centre for Economic Performance.
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.