# Transportation Cost Differential

## Definition

The significant difference in expense between various modes of transportation, particularly between water-carriage and land-carriage. This differential determines which goods can be profitably traded over different distances and thus shapes market extent and specialisation patterns.

## Source Chapter

Book I, Chapter 3

## Context

Smith provides detailed calculations showing that land-carriage of two hundred tons requires the maintenance of a hundred men for three weeks and four hundred horses, while water-carriage requires only six or eight men and a ship, demonstrating how transportation costs determine market feasibility.

## Economic Domain

Exchange

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