Transport costs in new economic geography models: A more realistic approach

Miguel Puente‐Ajovín and Fernando Sanz‐Gracia

International Journal of Economic Theory, 2021, vol. 17, issue 3, 221-233

Abstract: This paper proposes an alternative method to the iceberg approach for modeling transport costs. Instead of part of the good evaporating in transit, we take as our basis the idea that certain workers in companies are in productive occupations in the strict sense, and others work in transport. This simple change is found to be capable of overcoming most of the criticisms associated with the iceberg approach.

Date: 2021
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https://doi.org/10.1111/ijet.12229

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ijethy:v:17:y:2021:i:3:p:221-233

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