Distance and Time Effects in Swedish Commodity Prices, 1732–1914
We study the role of distance and time in statistically explaining price dispersion across 32 Swedish towns for 19 commodities from 1732 to 1914. The resulting large number of relative prices (502,689) allows precise estimation of distance and time effects, and their interaction. We find an effect of distance that declines significantly over time, beginning in the 18th century, well before the arrival of canals, the telegraph, or the railway.
We thank several discussants and referees for very constructive comments on an earlier, related working paper: Crucini and Smith (2014). We thank Dörte Heger and Margaux MacDonald for skilled research assistance. Crucini gratefully acknowledges the financial support of the National Science Foundation (SES-0524868). Smith thanks the Social Sciences and Humanities Research Council of Canada and the Bank of Canada research fellowship programme for support of this research. The opinions are the authors alone and are not those of the Bank of Canada or the National Bureau of Economic Research.