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A Reflection On The Effects Of Transport Costs Within The New Economic Geography

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  • Olga Alonso-Villar

    ()
    (Universidade de Vigo)

Abstract

The purpose of this paper is to analyze, in the light of recent contributions of New Economic Geography models, the spatial consequences of transport cost reductions. So far, the role of transport costs have been only partially unveiled, since papers focused either on the Dixit-Stiglitz-Iceberg framework or on the alternative framework put forth by Ottaviano et al. (2002)—which departs from the former in preferences and transport modelling. This paper goes a step further, offering a comprehensive view that includes the two approaches, in contexts both of two and of more than two locations. As opposed to other revisions of the literature, which have focused mainly on the centripetal forces included in these models, we emphasize the role of dispersion forces. The study suggests that in a two-location setting the results seem quite robust against changes in transportation modelling, so that considering either multiplicative transport costs or additive the predictions are identical. However, when allowing for a multilocation setup, the analysis becomes more complex.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2006-57.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 57.

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Length: 27 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2006-57

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Web page: http://www.ecineq.org
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Related research

Keywords: agglomeration; dispersion; monopolistic competition; transport costs.;

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  1. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608 Elsevier.
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Cited by:
  1. Stanislav, Kološta & Ivan, Sokáč & Filip, Flaška & Mário, Hošala, 2008. "Analýza siete ŽP Group podľa vybraných oblastí skúmania Novej ekonomickej geografie a teórie učiacich sa regiónov," MPRA Paper 13977, University Library of Munich, Germany.

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