Globalization in a nutshell
Authored by Kim Sneppen, Stefan Bornholdt
Date Published: 2018
DOI: 10.1103/physreve.98.042314
Sponsors:
European Union
Platforms:
No platforms listed
Model Documentation:
Other Narrative
Mathematical description
Model Code URLs:
Model code not found
Abstract
The geographical distribution of production is getting an increased
amount of attention in economics. Distributed trade opens for production
where it is cheapest, which in turn is reinforced by economies of scale.
Using a simple agent-based model for the geographical interplay between
transportation costs, economies of scale, as well as information costs,
we address here the transition between local and distributed economies.
The model naturally recapitulates that decreased transportation and
information costs favor large companies. This suggests history
dependence in the sense that new companies typically reemerge in the
vicinity of old ones. Further, it suggests that company stability
depends on transport costs, and that the transition from a local economy
to a global economy is naturally driven by reduced transportation costs
and an increased information horizon.
Tags
Commerce