Trade costs in empirical New Economic Geography
AbstractTrade costs are a crucial element of New Economic Geography (NEG) models. Without trade costs there is no role for geography. In empirical NEG studies the unavailability of direct trade cost data calls for the need to approximate these trade costs by introducing a trade cost function. In doing so, hardly any attention is paid to the (implicit) assumptions and empirical consequences of the particular trade cost function used. Based on a meta-analysis of NEG market access studies as well as on the results of estimating the NEG wage equation for a uniform sample while using different trade costs functions, we show that the relevance of the key NEG variable, market access, depends nontrivially on the choice of trade cost function. Next, we propose an alternative way to approximate trade costs that does not require the specification of a trade cost function, the so called implied trade costs approach. Overall, our results stress that the specification of trade costs can matter a lot for the conclusions reached in any empirical NEG study. We therefore call for a much more careful treatment of trade costs in future empirical NEG studies. Copyright (c) 2010 the author(s). Journal compilation (c) 2010 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): 3 (08)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Stanislav Cernosa, 2011. "Openness to Trade, Migration and Foreign Direct Investments of the EU," WIFO Working Papers 401, WIFO.
- Georg Hirte & Christian Lessmann, 2014. "Trade, Integration, and Interregional Inequality," CESifo Working Paper Series 4799, CESifo Group Munich.
- Martijn J. Burger & Mark Thissen & Frank G. van Oort & Dario Diodato, 2014. "The Magnitude and Distance Decay of Trade in Goods and Services: New Evidence for European Countries," Tinbergen Institute Discussion Papers 14-031/VII, Tinbergen Institute.
- Bosker, Maarten & Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2012.
"Relaxing Hukou: Increased labor mobility and China’s economic geography,"
Journal of Urban Economics,
Elsevier, vol. 72(2), pages 252-266.
- Bosker, Maarten & Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2010. "Relaxing Hukou: Increased labor mobility and China’s Economic Geography," CEPR Discussion Papers 8106, C.E.P.R. Discussion Papers.
- Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2010. "Relaxing Hukou - Increased Labor Mobility and China’s Economic Geography," CESifo Working Paper Series 3271, CESifo Group Munich.
- Fingleton, Bernard & Longhi, Simonetta, 2011.
"The effects of agglomeration on wages: evidence from the micro-level,"
SIRE Discussion Papers
2011-35, Scottish Institute for Research in Economics (SIRE).
- Bernard Fingleton & Simonetta Longhi, 2011. "The Effects of Agglomeration on Wages: Evidence from the Micro-Level," SERC Discussion Papers 0081, Spatial Economics Research Centre, LSE.
- Bernard Fingleton & Simonetta Longhi, 2011. "The effects of agglomeration on wages: evidence from the micro-level," Working Papers 1124, University of Strathclyde Business School, Department of Economics.
- Fingleton, Bernard & Longhi, Simonetta, 2011. "The effects of agglomeration on wages: evidence from the micro-level," SIRE Discussion Papers 2011-57, Scottish Institute for Research in Economics (SIRE).
- B. Fingleton & P. Cheshire & H. Garretsen & D. Igliori & J. Le Gallo & P. McCann & J. McCombie & V. Monastiriotis & B. Moore & M. Roberts, 2011. "Editorial," Spatial Economic Analysis, Taylor & Francis Journals, vol. 6(4), pages 351-357, December.
- Steven Brakman & Harry Garretsen & Charles van Marrewijk & Abdella Oumer, 2011. "The Positive Border Effect of EU Integration," CESifo Working Paper Series 3335, CESifo Group Munich.
- Gordon Mulligan & Mark Partridge & John Carruthers, 2012. "Central place theory and its reemergence in regional science," The Annals of Regional Science, Springer, vol. 48(2), pages 405-431, April.
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.