The World Is Not Yet Flat: Transport Costs Matter!

Kristian Behrens (), W. Mark Brown and Theophile Bougna
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W. Mark Brown: Statistics Canada

The Review of Economics and Statistics, 2018, vol. 100, issue 4, 712-724

Abstract: Using microlevel commodity flow data and microgeographic plant-level data, we construct industry-specific ad valorem trucking rate series and measures of geographic concentration to provide evidence on the relationship between transport costs and agglomeration. We find that low-transport-cost industries display significantly more geographic concentration in the cross-sectional dimension and that falling transport costs agglomerate industries in the panel dimension. The effects are large: the fall in trucking rates between 1992 and 2008 implied a 20% increase in geographic concentration on average, all else equal.

Date: 2018
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Working Paper: The world is not yet flat: Transport costs matter! (2015)
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