Friction of Distance Functions

There are four major categories of friction of distance functions:

• No effects of distance (1). Uncommon are economic activities on which distance has no effects. However, the distance-cost function telecommunication networks and the virtual space of the Internet have such a cost structure. Telephone calls can be included in this category as well as postal fees and public transit fares. All those activities generally have a fixed cost which is not related to distance, but often to a service zone. Once a new zone is entered (such as international phone calls) a new cost structure applies.
• Linear effects of distance (2). Transport costs are increasing proportionally to distance. Fuel consumption can be included in this category since it is a direct function of the distance traveled. For reasons of simplicity, a step-wise approach is often used to establish transport rates.
• Non-linear effects of distance (3). Freight distribution costs are growing in a non-linear fashion with distance from the distribution center. This mainly involves the costs of returning back empty. Inversely, intercontinental air transportation costs may be considered, which are not much higher than continental air transportation costs.
• Multimodal transport chain (4). Is a combination of linehaul and terminal costs. Transshipment costs at terminals (e.g. ports and airports) which, without involving a distance, increase the friction of distance as efforts must be spent at loading or unloading.

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