Agglomeration and directional imbalance of freight rates: the role of density economies in the transport sector

Kenmei Tsubota

No 488, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper examines the conventional assumption that bilateral transport costs are symmetric. We develop an economic geography model with transport sector in which asymmetric freight rates can occur as a result of density economies. Comparing this to models without density economies, we show that agglomeration of economic activities is more likely to emerge and that multiple equilibria can emerge for some parameters. Then we show the change in its bifurcation and stability of equilibrium and conclude that economies of density in transport flows can act as an agglomeration force.

Keywords: Transportation; Economic geography; Costs; Agglomeration; Asymmetric transport costs; Directional imbalance of freight rates; Density economies (search for similar items in EconPapers)
JEL-codes: L91 R12 R41 (search for similar items in EconPapers)
Date: 2015-02-01
New Economics Papers: this item is included in nep-geo, nep-tre and nep-ure
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Published in IDE Discussion Paper = IDE Discussion Paper, No. 488. 2015-02-01

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