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Determining the Level of Transportation Costs in the Core-Periphery Model: a Majority Voting Approach Author info | Abstract | Publisher info | Download info | Related research | Statistics Gallo, Fredrik () (Department of Economics, Lund University)
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We analyse the political determination of transportation costs in an analytically solvable core-periphery model. In a benchmark case with certainty about where agglomeration takes place, we find that a majority of voters prefers low trade costs and the resulting equilibrium is an industrialised core and a de-industrialised periphery. Allowing for uncertainty we show that a high trade cost candidate, that guarantees the initial symmetric equilibrium, may defeat the core-periphery equilibrium candidate. The reason is that a coalition of risk-averse immobile factors of production votes for status quo due to uncertainty about which region that will attract industrial activity.
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Paper provided by Lund University, Department of Economics in its series Working Papers with number
2005:32.
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Length: 37 pages
Date of creation: 31 May 2005Date of revision:
Handle: RePEc:hhs:lunewp:2005_032Note: This paper has been replaced by WP 2006:22 "Resisting Economic Integration when Industry Location is Uncertain"Contact details of provider: Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden Phone: +46 +46 222 0000 Fax: +46 +46 2224613 Web page: http://www.nek.lu.se/ More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (David Edgerton).
Keywords: core-periphery model ; majority voting ; new economic geography ; regional policy ; Other versions of this item:
Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F15 - International Economics - - Trade - - - Economic Integration R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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Kind, H.J. & Knarvik, K.H.M. & Schjelderup, G., 1999.
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"An analytically solvable core-periphery model ,"
Journal of Economic Geography ,
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Richard E. Baldwin & Paul Krugman, 2002.
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NBER Working Papers
9290, National Bureau of Economic Research, Inc.
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CEPR Discussion Papers
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European Economic Review ,
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