Regional Economies of Scale in Transportation and Regional Welfare
AbstractA discriminatory tariff can be welfare superior to free trade in the presence of regional economies of scale. This is because a tariff on non-regional trade concentrates trade within a region, lowering the cost of transportation, so that the gains from economies of scale can theoretically offset the losses from the tariff. To complement the theoretical point I estimate the relation between transportation cost and regional volume of trade. The estimates suggest that a 10% increase in the volume of trade brings about 2.5% reduction in transportation cost in the long run.
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.
Bibliographic InfoPaper provided by University of Kansas, Department of Economics in its series WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS with number 200705.
Length: 31 pages
Date of creation: Sep 2007
Date of revision: Sep 2007
regional economies of scale; transportation costs; preferential trade agreements; regional welfare;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-24 (All new papers)
- NEP-GEO-2007-11-24 (Economic Geography)
- NEP-INT-2007-11-24 (International Trade)
- NEP-URE-2007-11-24 (Urban & Real Estate Economics)
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.:
- Antonio Spilimbergo & Ernesto Stein, 1996.
"The Welfare Implications of Trading Blocs among Countries with Different Endowments,"
NBER Working Papers
5472, National Bureau of Economic Research, Inc.
- Antonio Spilimbergo & Ernesto Stein, 1998. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," NBER Chapters, in: The Regionalization of the World Economy, pages 121-152 National Bureau of Economic Research, Inc.
- Casas, Fran?ois R. & Choi, E. Kwan, 1990. "Transport Innovation and Welfare Under Variable Returns to Scale," Staff General Research Papers 278, Iowa State University, Department of Economics.
- Didier Laussel & Raymond Riezman, 2006. "Fixed Transport Costs and International Trade," CESifo Working Paper Series 1764, CESifo Group Munich.
- Jacek Cukrowski & Manfred M. Fischer, 2000. "Theory of Comparative Advantage: Do Transportation Costs Matter?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 311-322.
- David L. Hummels & Georg Schaur, 2013.
"Time as a Trade Barrier,"
American Economic Review,
American Economic Association, vol. 103(7), pages 2935-59, December.
- Mori, Tomoya & Nishikimi, Koji, 2002. "Economies of transport density and industrial agglomeration," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 167-200, March.
- David Hummels & Volodymyr Lugovskyy & Alexandre Skiba, 2007.
"The Trade Reducing Effects of Market Power in International Shipping,"
NBER Working Papers
12914, National Bureau of Economic Research, Inc.
- Hummels, David & Lugovskyy, Volodymyr & Skiba, Alexandre, 2009. "The trade reducing effects of market power in international shipping," Journal of Development Economics, Elsevier, vol. 89(1), pages 84-97, May.
- Joern Kleinert & Julia Spies, 2011. "Endogenous Transport Costs in International Trade," IAW Discussion Papers 74, Institut für Angewandte Wirtschaftsforschung (IAW).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jianbo Zhang).
If references are entirely missing, you can add them using this form.