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The World Is Not Yet Flat: Transport Costs Matter!

Kristian Behrens1; W. Mark Brown2; Théophile Bougna3

1 Université du Québec à Montréal, National Research University Higher School of Economics, CIRPÉE, and CEPR · 2 Statistics Canada · 3 Université du Québec à Montréal and World Bank

The Review of Economics and Statistics 2018 open access

The paper provides evidence of the effects of changes in transport costs on the geographic concentration of industries. The analysis uses micro-level commodity flow data and micro-geographic plant-level data to construct industry-specific ad valorem trucking rates and continuous measures of geographic concentration. The findings show that, controlling for international trade exposure and input-output links, increasing trucking rates are significantly associated with declining geographic concentration. The effect is large: changes in trucking rates explain around 20 percent of the observed decline in geographic concentration of Canadian manufacturing industries between 1992 and 2008.

DOI
10.1162/rest_a_00729
Volume
100 (4)
Pages
712-724
Language
en
Export
BibTeX
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