Corridor Capacity and Infrastructure Costs

The iceberg transport cost model is a commonly used, simple

economic model An economic model is a theoretical construct representing economic processes by a set of variables and a set of logical and/or quantitative relationships between them. The economic model is a simplified, often mathematical, framework designed ...

of transportation costs. It relates transport costs linearly with distance, and pays these costs by extracting from the arriving volume. The model is attributed to

Paul Samuelson Paul Anthony Samuelson (May 15, 1915 – December 13, 2009) was an American economist who was the first American to win the Nobel Memorial Prize in Economic Sciences. When awarding the prize in 1970, the Swedish Royal Academies stated that he "h ...

's 1954 article in Deardorffs' Glossary of International Economics.Alan Deardorff's Glossary of International Economics
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Paul Krugman Paul Robin Krugman ( ; born February 28, 1953) is an American New Keynesian economics, New Keynesian economist who is the Distinguished Professor of Economics at the CUNY Graduate Center, Graduate Center of the City University of New York. He ...

's 1991 paper on Economic GeographyKrugman, Paul(1991) "Increasing returns and economic geography".

Journal of Political Economy The ''Journal of Political Economy'' is a monthly peer-reviewed academic journal published by the University of Chicago Press. Established by James Laurence Laughlin in 1892, it covers both theoretical and empirical economics. In the past, the ...

Vol. 99, No.3 (June 1991) is one of the more widely cited papers employing the model. The metaphor is that an iceberg melts when transported, so only a fraction of the starting amount arrives at the destination. And a smaller amount arrives if the distance traveled is longer. A more realistic idea might be an oil tanker that uses up its oil based on the distance it travels.

References

External links

* Krugman, Paul(1991)
Increasing returns and economic geography
.

Vol. 99, No. 3 (Jun., 1991), pp. 483–99. * * * *Maarten Bosker, Eltjo Buringh. 2020. " Ice(berg) Transport Costs." The Economic Journal. Transport economics {{transportation-stub