Discussion paper

DP4933 Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

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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Citation

Duranton, G and M Storper (2005), ‘DP4933 Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs‘, CEPR Discussion Paper No. 4933. CEPR Press, Paris & London. https://cepr.org/publications/dp4933