Working Paper: NBER ID: w9886
Authors: Edward L. Glaeser; Janet E. Kohlhase
Abstract: The theoretical framework of urban and regional economics is built on transportation costs for manufactured goods. But over the twentieth century, the costs of moving these goods have declined by over 90% in real terms, and there is little reason to doubt that this decline will continue. Moreover, technological change has eliminated the importance of fixed infrastructure transport (rail and water) that played a critical role in creating natural urban centres. In this article, we document this decline and explore several simple implications of a world where it is essentially free to move goods, but expensive to move people. We find empirical support for these implications.
Keywords: No keywords provided
JEL Codes: R12; R14; R23; R41; J30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Decline in transportation costs (L91) | Transformation of urban economic landscape (R11) |
| Decline in transportation costs (L91) | Reevaluation of urban economic models (R11) |
| Decline in transportation costs (L91) | Concentration of urban populations in metropolitan areas (R23) |
| Reevaluation of urban economic models (R11) | Shift from traditional fixed-cost models to agglomeration effects (F12) |
| Decline in transportation costs (L91) | Shift towards models emphasizing moving people and urban agglomeration (R23) |