A Model Of Economic Fluctuations And Growth Arising From Th

An economic growth model that is based on maximizing land rent is developed, based on Adam Smith's characterizations of transportation and the extent of the market and on Smith's implicit assumptions about the nature of production conditions in industry. The model is modernized by consider...

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Bibliographic Details
Published inThe Logistics and transportation review Vol. 24; no. 2; p. 121
Main Author Santini, Danilo J
Format Journal Article
LanguageEnglish
Published Vancouver University of British Columbia, Faculty of Commerce and Business Administration 01.06.1988
Subjects
Economic growth
Economic models
Growth models
Mathematical analysis
Oil consumption
Technological change
Transportation economics
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Summary:An economic growth model that is based on maximizing land rent is developed, based on Adam Smith's characterizations of transportation and the extent of the market and on Smith's implicit assumptions about the nature of production conditions in industry. The model is modernized by considering transportation fuel costs and the thermodynamic efficiency of vehicles. It demonstrates how, in an economy where transportation is an important element in the extent of the market and the latter is a critical factor in the level of economic growth, an increase in transportation costs can cause either: 1. an economywide recessionary effect when no mode or fuel switching occurs, or 2. a depression in the vehicle manufacturing sector when a transition from one mode or fuel to another occurs. In the latter case, accomplishment of the transition results in long-run expansion of the extent of the market. The model offers an alternative explanation of recessions, depressions, and long-run economic growth.
ISSN:0047-4991