I think you are reading literature on New Economic Georgraphy.
D-S duopolistic competition model is a very important model in economics, and you can see its applications in many areas of econmics. So I would recommend you to read their original paper, which, as I remember is in AER (1977). The iceberg theory is saying that the goods erodes over distance as transportation cost, which makes the model more tractable. Actually these two things are both anchoring assumptions underlying NEG, otherwise many of NEG models won't have analytical solution or becomes untractable.