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How endogenous asymmetries in interregional market access trigger regional divergence

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  • Behrens, Kristian

Abstract

We investigate how asymmetric trade patterns in differentiated products affect the regional distribution of economic activities. The asymmetry in interregional market access is an endogenous result of price competition and industry location and arises for intermediate values of trade costs. We show that the emergence of one-way trade in differentiated products gives rise to strong agglomeration forces and leads to the absorption of the smaller region's industry by the larger region. The number of spatial equilibria increases once the pattern of trade is endogenously accounted for.
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  • Behrens, Kristian, 2005. "How endogenous asymmetries in interregional market access trigger regional divergence," Regional Science and Urban Economics, Elsevier, vol. 35(5), pages 471-492, September.
    • Handle: RePEc:eee:regeco:v:35:y:2005:i:5:p:471-492
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    11. Takanori Ago & Ikumo Isono & Takatoshi Tabuchi, 2003. "Locational Disadvantage and Losses from Trade: Three Regions in Economic Geography," CIRJE F-Series CIRJE-F-224, CIRJE, Faculty of Economics, University of Tokyo.
    12. Behrens, Kristian, 2004. "Agglomeration without trade: how non-traded goods shape the space-economy," Journal of Urban Economics, Elsevier, vol. 55(1), pages 68-92, January.
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    Cited by:

    1. Kristian Behrens & Carl Gaigné, 2006. "Developing the "outermost regions" of Europe: some lessons from economic geography," Working Papers hal-02285630, HAL.
    2. Behrens, Kristian, 2005. "Market size and industry location: Traded vs non-traded goods," Journal of Urban Economics, Elsevier, vol. 58(1), pages 24-44, July.
    3. Kristian Behrens, 2011. "International Integration And Regional Inequalities: How Important Is National Infrastructure?," Manchester School, University of Manchester, vol. 79(5), pages 952-971, September.
    4. Toshihiro Okubo & Pierre M. Picard & Jacques-François Thisse, 2014. "On The Impact Of Competition On Trade And Firm Location," Journal of Regional Science, Wiley Blackwell, vol. 54(5), pages 731-754, November.
    5. Okubo, Toshihiro & Picard, Pierre M. & Thisse, Jacques-François, 2010. "The spatial selection of heterogeneous firms," Journal of International Economics, Elsevier, vol. 82(2), pages 230-237, November.
    6. Behrens, Kristian & Carl Gaigne & Jacques-Francois Thisse, 2006. "Is the regulation of the transport sector always detrimental to consumers?," CIRJE F-Series CIRJE-F-455, CIRJE, Faculty of Economics, University of Tokyo.
    7. G.A. Minerva, 2006. "Natural Advantage, Location and Trade Patterns in Increasing Returns to Scale Industries," Working Papers 560, Dipartimento Scienze Economiche, Universita' di Bologna.
    8. Gokan, Toshitaka, 2013. "The location of manufacturing firms and imperfect information in transport market," IDE Discussion Papers 398, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    9. Behrens, Kristian & Gaigné, Carl & Thisse, Jacques-François, 2009. "Industry location and welfare when transport costs are endogenous," Journal of Urban Economics, Elsevier, vol. 65(2), pages 195-208, March.
    10. Picard, P.M., 2015. "Trade, economic geography and the choice of product quality," Regional Science and Urban Economics, Elsevier, vol. 54(C), pages 18-27.
    11. Maria Florencia Granato, 2011. "REGIONAL NEW ECONOMIC GEOGRAPHY (refereed paper)," ERSA conference papers ersa10p747, European Regional Science Association.
    12. Thisse, Jacques-François & picard, pierre & Okubo, Toshihiro, 2010. "No trade, one-way or two-way trade?," CEPR Discussion Papers 8161, C.E.P.R. Discussion Papers.

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