Noblet, Sandrine and Belgodere, Antoine (2010): Coordination cost and the distance puzzle.
Download (327Kb) | Preview
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.
|Item Type:||MPRA Paper|
|Original Title:||Coordination cost and the distance puzzle|
|Keywords:||Transport cost ; coordination cost ; international trade ; distance puzzle|
|Subjects:||D - Microeconomics > D2 - Production and Organizations > D23 - Organizational Behavior; Transaction Costs; Property Rights
F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies
|Depositing User:||Antoine Belgodere|
|Date Deposited:||17. Dec 2010 09:49|
|Last Modified:||22. Feb 2013 16:56|
Anderson, J. E., van Wincoop, E., 2003. Gravity with gravitas: A solution to the border puzzle. American Economic Review 93 (1), 170-192.
Archanskaia, E., Daudin, G., 2010. Trade elasticities and the distance puzzle, preliminary version, presented at the l'Eastern Economic Association, feb. 2010, Philadelphia.
Berthelon, M., Freund, C., 2008. On the consevration of distance in international trade. Journal of International Economics 75, 310-320.
Brun, J.-F., Carrière, C., Guillaumont, P., de Melo, J., 2005. Has distance died? evidence from a panel gravity model. World Bank Economic Review 19 (56), 99-120.
Buch, C. M., Kleinert, J., Toubal, F., 2004. The distance puzzle: on the interpretation of the distance coefficient in gravity equations. Economics Letters 83 (3), 293-298.
Carrière, C., Schi, M., 2005. On the geography of trade: distance is alive and well. Revue Economique 6 (56), 1249-1274.
Coe, D. T., Subramanian, A., Tamirisa, N. T., 2007. The missing globalization puzzle: evidence of the declining importance of distance. IMF Sta Papers 1 (54), 34-58.
Coe, D. T., Subramanian, A., Tamirisa, N. T., Bhavnani, R., 2002. The missing globalization puzzle. IMF Working Papers 02/171, International Monetary Fund.
Coughlin, C. C., 2004. The increasing importance of proximity for exports from u.s. states. Federal Reserve Bank of St. Louis Review 86, 1-18.
Deardor, A., 1998. Determinants of bilateral trade: Does gravity work in a neoclassical world? In: Frankel, J. A. (Ed.), The Regionalization of the World Economy. University of Chicago Press for the NBER, pp. 7-32.
Dias, D. A., January 2010. Gravity and globalization, mimeo UCLA.
Disdier, A.-C., Head, K., 09 2008. The puzzling persistence of the distance effect on bilateral trade. The Review of Economics and Statistics 90 (1), 37-48.
Duranton, G., Storper, M., February 2008. Rising trade costs? agglomeration and trade with endogenous transaction costs. Canadian Journal of Eco- nomics 41 (1), 291-319.
Fink, C., Mattoo, A., Neagu, I. C., 2005. Assessing the impact of communication costs on international trade. Journal of International Economics 67 (2), 428-445.
Fontagné, L., Zignago, S., 2007. A re-evaluation of the impact of regional agreements on trade patterns. Economie Internationale / International Economics 109, 31-51.
Grossman, G. M., 1998. The regionalization of the world economy. University of Chicago Press for the NBER, Ch. Comment on Deardor.
Hummels, D., 2007. Transportation costs and international trade in the second era of globalization. Journal of Economic Perspectives 21 (3), 131-154.
Hummels, D. L., 2001. Time as a trade barrier. GTAP Working Papers 1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
Krautheim, S., 2007. Gravity and information: Heterogeneous rms, exporter networks and the 'distance puzzle'. Economics Working Papers ECO2007/51, European University Institute.
Leamer, E. E., Levinsohn, J., 1995. International trade theory: The evidence. In: Grossman, G. M., Rogo, K. (Eds.), Handbook of International Eco- nomics. Vol. 3. Elsevier, Ch. 26, pp. 1339-1394.
Leamer, E. E., Medberry, C. J., 1993. U.s. manufacturing and an emerging mexico. NBER Working Papers 4331, National Bureau of Economic Research, Inc.
Siliverstovs, B., Schumacher, D., 2008. Disaggegated trade ows and the missing globalization puzzle". Economie Internationale / International Economics 115, 141-164
Stein, E., Daude, C., 2007. Longitude matters: Time zones and the locationof foreign direct investment. Journal of International Economics 71 (1), 96-112