The price of distance
Pricing-to-market and geographic barriers
Bibliographic Data
| ID | 12694141 |
|---|---|
| Authors | Kazuko Kano (Department of Commerce, Waseda University , Shinjuku-ku, Tokyo 169-8050, Japan, corresponding author), Takashi Kano (0000-0003-1649-5047, Graduate School of Economics, Hitotsubashi University , Kunitachi, Tokyo 186-8601, Japan), Kazutaka Takechi (0000-0002-8163-160X, Hosei University) |
| Year | 2021 |
| Volume | 22 |
| Issue | 4 |
| Pages | 873-899 |
| Publication date | 2021-03-18 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Economic Geography (JOURNAL) |
| Journal identifiers | ISSN: 1468-2702 • E-ISSN: 1468-2710 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1093/jeg/lbab013 |
| OpenAlex | W3180849528 |
| Language | EN |
| Citations received | 3 |
| References cited | 31 |
Trade costs contribute to price differentials across geographically separated regions. However, when using price differential data, the identification of distance-elastic trade costs depends on how producers set prices in remote markets. To address this problem, we first empirically demonstrate that a variable markup model is more relevant than a constant markup model to describe the data variation. We then adopt a nonhomothetic preference framework to consider pricing-to-market and self-selection bias to pin down the distance effect. If these factors are not accounted for, the distance elasticity of trade costs is small. However, by incorporating these mechanisms, our empirical analysis using micro-level data reveals that the distance effect is significantly large, suggesting that the price of geographic barriers to regional trade is high
Econometrics · Economics · Geographical distance · International economics · Market segmentation · Market Size · Markup language · Microeconomics · Population · Preference · Price discrimination · Variable (mathematics · Computer Science · Economic Policies and Impacts · Economics of Agriculture and Food Markets · Global trade and economics · Mathematics
Trade and the Topography of the Spatial Economy
Trade Costs
Infrastructure, Geographical Disadvantage, Transport Costs, and Trade
Estimating Trade Flows
Gravity with Gravitas
The Tip of the Iceberg
The Puzzling Persistence of the Distance Effect on Bilateral Trade
Structural gravity equations with intensive and extensive margins
Transport costs
The Law of One Price without the Border
Railroads of the Raj
Transportation Costs and International Trade in the Second Era of Globalization
| Citations per year | 1.5 |
|---|---|
| Citation span | 2024 - 2026 (3) |
| Highly cited | No |