Taxation, infrastructure and endogenous trade costs in new economic geography
AbstractThis paper presents a new economic geography model with distortionary taxation and endogenized trade costs. Tax revenues finance a public good, infrastructure. We show that the introduction of costly public investment in infrastructure increases agglomerative tendencies. With respect to the regions' sizes, in the periphery, the price index for manufacturing goods decreases, whereas for the core, the price index is rather high since the distortionary effect of taxes dominates. 'Free riding'- or, in terms of regional policy, externally funded infrastructure investment - is beneficial for the periphery, which can devote all its tax revenue to local demand support, generating a positive home market effect and driving the catch up process. Copyright (c) 2009 the author(s). Journal compilation (c) 2009 RSAI.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Papers in Regional Science.
Volume (Year): 89 (2010)
Issue (Month): 1 (03)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190
Other versions of this item:
- Gruber, Stefan & Marattin, Luigi, 2008. "Taxation, infrastructure, and endogenous trade costs in New Economic Geography," MPRA Paper 1068, University Library of Munich, Germany.
- S. Gruber & L. Marattin, 2009. "Taxation, Infrastructure, and Endogenous Trade Costs in New Economic Geography," Working Papers 668, Dipartimento Scienze Economiche, Universita' di Bologna.
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Barro, Robert J, 1990.
"Government Spending in a Simple Model of Endogenous Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 98(5), pages S103-26, October.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Robert J. Barro, 1991. "Government Spending in a Simple Model of Endogenous Growth," NBER Working Papers 2588, National Bureau of Economic Research, Inc.
- Puga, Diego, 2001.
"European Regional Policies in Light of Recent Location Theories,"
CEPR Discussion Papers
2767, C.E.P.R. Discussion Papers.
- Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
- Kilkenny, Maureen, 1998. "Transport Costs, the New Economic Geography, and Rural Development," Staff General Research Papers 1201, Iowa State University, Department of Economics.
- Forslid, Rikard & Andersson, Fredrik, 1999.
"Tax Competition and Economic Geography,"
Research Papers in Economics
2000:5, Stockholm University, Department of Economics.
- Andersson, Fredrik & Forslid, Rikard, 1999. "Tax Competition and Economic Geography," CEPR Discussion Papers 2220, C.E.P.R. Discussion Papers.
- Fredrik Andersson & Rikard Forslid, 2000. "Tax Competition and Economic Geography," Econometric Society World Congress 2000 Contributed Papers 1356, Econometric Society.
- Martin, Philippe & Rogers, Carol Ann, 1994.
"Industrial Location and Public Infrastructure,"
CEPR Discussion Papers
909, C.E.P.R. Discussion Papers.
- Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
- Kilkenny, Maureen, 2003.
"Transport Costs and Rural Development,"
Staff General Research Papers
10309, Iowa State University, Department of Economics.
- Maureen Kilkenny, 1995. "Transport Costs and Rural Development," Food and Agricultural Policy Research Institute (FAPRI) Publications 95-wp133, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
- Maureen Kilkenny, 1995. "Transport Costs and Rural Development," Center for Agricultural and Rural Development (CARD) Publications 95-wp133, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Kilkenny, Maureen, 1998. "Transport Costs and Rural Development," Staff General Research Papers 1185, Iowa State University, Department of Economics.
- Martins-da-Rocha, Victor Filipe & Vailakis, Yiannis, 2008.
"Endogenous Transaction Costs,"
Economics Working Papers (Ensaios Economicos da EPGE)
680, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
- Kashif S. Mansori, 2003. "The Geographic Effects of Trade Liberalization with Increasing Returns in Transportation," Journal of Regional Science, Wiley Blackwell, vol. 43(2), pages 249-268.
- Dixit, Avinash K & Stiglitz, Joseph E, 1975.
"Monopolistic Competition and Optimum Product Diversity,"
The Warwick Economics Research Paper Series (TWERPS)
64, University of Warwick, Department of Economics.
- Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
- repec:ebl:ecbull:v:18:y:2006:i:5:p:1-7 is not listed on IDEAS
- BEHRENS, Kristian & GAIGNE, Carl & OTTAVIANO, Gianmarco I.P. & THISSE, Jacques-François, .
"How density economies in international transportation link the internal geography of trading partners,"
CORE Discussion Papers RP
-1870, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Behrens, Kristian & Gaigne, Carl & Ottaviano, Gianmarco I.P. & Thisse, Jacques-Francois, 2006. "How density economies in international transportation link the internal geography of trading partners," Journal of Urban Economics, Elsevier, vol. 60(2), pages 248-263, September.
- Fan, Shenggen & Zhang, Xiaobo, 2004. "Infrastructure and regional economic development in rural China," China Economic Review, Elsevier, vol. 15(2), pages 203-214.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-99, June.
- Egger, Hartmut & Falkinger, Josef, 2006. "The role of public infrastructure and subsidies for firm location and international outsourcing," European Economic Review, Elsevier, vol. 50(8), pages 1993-2015, November.
- J. Vernon Henderson, Zmarak Shalizi, and Anthony J. Venables, 2001.
"Geography and development,"
Journal of Economic Geography,
Oxford University Press, vol. 1(1), pages 81-105, January.
- Gilles Duranton & Michael Storper, 2005.
"Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs,"
CEP Discussion Papers
dp0683, Centre for Economic Performance, LSE.
- Gilles Duranton & Michael Storper, 2008. "Rising trade costs? Agglomeration and trade with endogenous transaction costs," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 292-319, February.
- Duranton, Gilles & Storper, Michael, 2005. "Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs," CEPR Discussion Papers 4933, C.E.P.R. Discussion Papers.
- Stefan Gruber, 2010. "To Migrate or to Commute?," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 2(1), pages 110-134, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.