Theory of Comparative Advantage: Do Transportation Costs Matter?

Posted: 6 Apr 2001

See all articles by Manfred M. Fischer

Manfred M. Fischer

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics

Jacek Cukrowski

CASE - Center for Social and Economic Research

Abstract

In this paper we present a formal analysis that incorporates returns to transportation into a Ricardian framework to predict trade patterns. The important point gained from this analysis is that increasing returns to transportation, coupled with appropriate distances between trading partners, can be shown to reverse Ricardian predictions even when there are no international differences in tastes, technology, or factor endowments. Additional gains from trade may emerge from reductions in aggregate delivery costs owing to scale economies.

Suggested Citation

Fischer, Manfred M. and Cukrowski, Jacek, Theory of Comparative Advantage: Do Transportation Costs Matter?. Journal of Regional Science, Vol. 40, No. 2, May 2000. Available at SSRN: https://ssrn.com/abstract=242216

Manfred M. Fischer (Contact Author)

Vienna University of Economics and Business - Institute for Economic Geography and GIScience, Department of Socioeconomics ( email )

Welthandelsplatz 1, D4
Vienna, 1020
Austria

Jacek Cukrowski

CASE - Center for Social and Economic Research ( email )

Center for Social and Economic Research,
Warsaw
Poland

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