By ifmo Institut fur Mobilitatsforschung
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Additional info for Transport, Trade and Economic Growth - Coupled or Decoupled?: An Inquiry into Relationships between Transport, Trade and Economic Growth and into User ... Policy (Mobilitatsverhalten in der Freizeit)
Terms of trade for the small importing country are improved by reducing the costs of imports and raising the return per unit of exports (at given prices in the rest of the world, 2. it has a favorable effect on the volume of imports. 3 Conclusions Transport costs act similarly as trade barriers The importance of transport costs is frequently underestimated Studies examining the surge of world trade often attribute it to tariff barrier reductions. But their findings only hold true if unrealistically high elasticities of substitution between home and foreign good are assumed.
Krugman describes the relationship between increasing returns to scale and transport costs as follows: “In a world characterized both by increasing returns and by transportation costs, there will obviously be an incentive to concentrate production of a good near its largest market, even if there is some demand for the good elsewhere. The reason is simply that by concentrating production in one place, one can realize the scale economies, while by locating near the larger market one minimizes transport costs.
24 Nadiri and Mamuneas get a net return of 35 % for Highway Capital for the 1950s and 1960s which is attributed to the fact that the Interstate was being built. K. manufacturing. S. for the years from 1970 to 1987 in a variable cost function. They use a Leontief specification, which means that the proportion of the factor inputs used varies with output. Public and private capital variables are treated as exogenous, whereas public capital is a factor explaining observed scale effects. The cost effects of infrastructure, fixity and internal economies of scale can be reflected by the cost elasticity with respect to output derived from the variable cost function.