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Transportation costs in archipelagos : evidence from Indonesia

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  • Hayakawa, Kazunobu
  • Isono, Ikumo
  • Kumagai, Satoru

Abstract

In this paper, we empirically examine the effects of domestic transportation costs on product prices in an archipelagic country, namely, Indonesia. Specifically, we investigate the province-level price of televisions. Our analysis reveals that maritime transportation is more costly than land transportation. For example, a 1% increase in distance in maritime and land transportation increases a product price by 0.08% and 0.02%, respectively. This result implies that the geographical concentration or agglomeration of industries is much costlier in archipelagic countries. In other words, enjoying agglomeration effects is more difficult for archipelagic countries compared with single-island countries; in this sense, archipelagic countries have a topographical disadvantage.

Suggested Citation

  • Hayakawa, Kazunobu & Isono, Ikumo & Kumagai, Satoru, 2019. "Transportation costs in archipelagos : evidence from Indonesia," IDE Discussion Papers 756, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper756
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    Cited by:

    1. Yilmazkuday, Hakan, 2012. "Understanding interstate trade patterns," Journal of International Economics, Elsevier, vol. 86(1), pages 158-166.
    2. Sofiyandi, Yusuf & Kurniawan, Yusuf Reza & Yudhistira, Muhammad Halley, 2023. "The impact of maritime logistics subsidy on food prices: Evidence from Indonesia," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 1026-1045.

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    More about this item

    Keywords

    Price; Indonesia; Transport; Transportation;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

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