Cities, Regions and the Decline of Transport Costs

55 Pages Posted: 5 Aug 2003 Last revised: 4 Nov 2010

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Janet E. Kohlhase

University of Houston - Department of Economics

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Date Written: August 2003

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.

Suggested Citation

Glaeser, Edward L. and Kohlhase, Janet E., Cities, Regions and the Decline of Transport Costs (August 2003). NBER Working Paper No. w9886. Available at SSRN: https://ssrn.com/abstract=430600

Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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Brookings Institution

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Janet E. Kohlhase

University of Houston - Department of Economics ( email )

Houston, TX 77204-5882
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