We develop a simple theoretical framework for thinking about how geographic frictions, and in particular travel costs … the theory. Results show that travel costs constitute an important friction to collaboration: after a low-cost airline … that are otherwise embedded in worse local environments. Consistent with the theory, lower travel costs also endogenously …

the late 1990s, in 2006, a) air-travel demand was 8% more price sensitive; b) passengers displayed a strong preference for …