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Iceberg transport cost model

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The iceberg transport cost model is a simple economic model of transportation costs. It is based on the idea of paying the cost of transporting a good with a portion of the transported good, rather than any other resources. The model is attributed to Paul Samuelson's 1954 article in Deardorffs' Glossary of International Economics. Paul Krugman's 1991 paper in the Journal of Political Economy is one of many significant papers employing the model.

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Iceberg transport cost model Wikipedia