Economic, Transport and Commercial Geography

Economic, Transport and Commercial Geography

An understanding of the economic aspects of transportation relies on three interdependent fields of geography, each based on a set of considerations:

  • Economic geography is concerned with the location, distribution, and spatial organization of economic activities, particularly in terms of their supply and demand requirements for energy, resources, goods, capital, and labor.
  • Transport geography is concerned with the circulation of passengers and freight. It seeks to understand their spatial organization by linking spatial constraints and attributes with the origin, the destination, the extent, nature, and the purpose of movements.
  • Commercial geography investigates the spatial characteristics of trade and transactions in terms of their nature, causes, and consequences.

Economic, transport, and commercial geography are obviously interrelated. There is a close relationship between the sphere of locations (the geographical setting of supply and demand), the sphere of transactions (the geographical setting of exchanges), and the sphere of circulation (the geographical setting of movements). This implies location costs, transaction costs, and transportation costs. The main transaction costs investigated by commercial geography are:

  • Search and information costs. Costs related to finding the appropriate goods on the market, such as their availability and price.
  • Negotiation costs. Costs involved in reaching an agreement with the other party to the transaction, a contract being the outcome.
  • Policing and enforcement costs. Costs related to ensuring that both parties respect the terms of the contract and, if not the case, taking legal actions to correct the situation.