Coordination cost and the distance puzzle

Sandrine Noblet and Antoine Belgodere

MPRA Paper from University Library of Munich, Germany

Abstract: Since 1960, transport costs have been falling, but international exchange did not become less sensitive to distance. We propose the following explanation for this puzzle: in a Dixit-Stiglitz framework, a decrease in transport cost favors trade, which may increase the international specialization (i.e. the number of varieties of intermediate goods used in production). An increased international specialization increases the need for coordination, and makes relatively more important for downstream firms to be close to their suppliers. As a result, trade increases with all partners, but more quickly for neighbors than for distant countries.

Keywords: Transport cost; coordination cost; international trade; distance puzzle (search for similar items in EconPapers)
JEL-codes: D23 F12 (search for similar items in EconPapers)
Date: 2010-12
New Economics Papers: this item is included in nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/27502/1/MPRA_paper_27502.pdf original version (application/pdf)

Related works:
Working Paper: Coordination cost and the distance puzzle (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:27502

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().