SPATIAL SCOPE OF A MODERN TRANSPORT TECHNOLOGY
Version of Record online: 2 JUL 2013
© 2013 Wiley Periodicals, Inc.
Journal of Regional Science
Volume 53, Issue 4, pages 712–723, October 2013
How to Cite
Pires, A. J. G. and Pontes, J. P. (2013), SPATIAL SCOPE OF A MODERN TRANSPORT TECHNOLOGY. Journal of Regional Science, 53: 712–723. doi: 10.1111/jors.12032
- Issue online: 18 SEP 2013
- Version of Record online: 2 JUL 2013
- Manuscript Accepted: JAN 2013
- Manuscript Revised: NOV 2012
- Manuscript Received: MAY 2012
This paper studies the endogenous choice of transport technology, “traditional” versus “modern,” by a shipper. Although the “modern” technology is characterized by higher fixed costs and a higher speed of transport, it is chosen for intermediate distances, rather than to long distances. The reason is that, when the shipper switches to the “modern” technology, the industrial firm changes production from the home to the foreign city. Thus, the demand for transport decreases proportionally to the distance between the home and foreign city. For long distances, revenue from transportation becomes so low that the “modern” technology does not break even.