Production versus Transportation Technologies: Theory and Evidence
Florida International University (FIU) - Department of Economics
The impacts of production and transportation technology changes are studied in a general-equilibrium trade model with an analytical solution where agents in each location produce different varieties of a common set of goods. Wages are equalized in nominal terms across locations, with differences in purchasing power offset by agents' preferences for particular locations in the initial steady-state. Instead of assuming iceberg costs, a transportation sector is modeled to allow an efficient distribution of workers across the production and transportation sectors. The counterfactuals have current and historical implications on the national, regional, and industrial variables of the U.S. economy.
Number of Pages in PDF File: 56
Keywords: Technology, Trade, Intermediate Inputs, Transportation
JEL Classification: R12, R13, R32
Date posted: June 22, 2007 ; Last revised: February 26, 2015