Real Estate Papers

Document Type

Journal Article

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Publication Source

Canadian Journal of Economics/Revue canadienne d'économique





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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 that seeks to replicate features from the machinery industry, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade. The subtle relationship between (endogenous) transport costs and the sensitivity of trade to distance is also explored.

Alors que les coûts de transport ont chuté, les résultats empiriques montrent que les coûts totaux de transaction sont en hausse. A l'aide d'un modèle de localisation industrielle avec coûts de transaction endogènes qui tente d'approximer les caractéristiques de l'industrie de la machinerie, on montre comment et dans quelles conditions une chute des coûts de transport peut entraîner un accroissement des les coûts totaux de transaction. On explore aussi la relation subtile entre les coûts de transport (endogènes) et la sensibilité des flux de commerce au facteur distance.

Copyright/Permission Statement

This is the peer reviewed version of the following article: Duranton, G. and Storper, M. (2008), Rising trade costs? Agglomeration and trade with endogenous transaction costs. Canadian Journal of Economics/Revue canadienne d'économique, 41: 292–319., which has been published in final form at doi: 10.1111/j.1365-2966.2008.00464.x. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving


At the time of publication, author Gilles Duranton was affiliated with the University of Toronto. Currently, he is a faculty member at the Real Estate Department at the University of Pennsylvania.


transaction costs, trade costs, transport costs, agglomeration, vertically linked industries



Date Posted: 27 November 2017

This document has been peer reviewed.