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Asymmetric trade and agglomeration

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  • BEHRENS, Kristian

    () (LATEC - CNRS UMR 5118 - MSH - Université de Bourgogne)

Abstract

We extend the quadratic utility approach by Ottaviano et al. [19] and by Behrens [1] to the range of intermediate values of transport costs in or- der to investigate how asymmetric trade affects the regional distribution of economic activities. Asymmetry in trade is an endogenous result of price competition and transport costs: depending on both the spatial distribution of firms and the value of transport costs, only firms located in one of the two regions can profitably access the foreign market, which gives rise to more complex patterns of trade. We show that the unilateral breaking of autarky gives rise to strong agglomeration forces which lead to the absorption of the smaller regions' industry. Further, the number of equilibria increases once the structure of trade is endogenously accounted for. / Nous étendons le modèle quadratique de Ottaviano et al. [19] et Behrens [1] aux valeurs intermédiaires de coûts de transport afin d'examiner la manière dont le commerce asymétrique affecte la répartition régionale de l'activité économique. L'asymétrie dans le commerce est un résultat endogène de la compétition en prix et de l'existence de coûts de transport. Suivant la répartition spatiale des firmes et les valeurs des coûts de transport, seules les firmes installées dans l'une des deux régions peuvent accéder aux marchés extérieurs, ce qui résulte en des structures d'échanges plus complexes. Nous montrons que l'abandon unilatéral de l'autarcie donne naissance à de fortes forces d'agglomération, lesquelles mènent à l'absorption de l'industrie de la petite région. De plus, le nombre d'équilibres augmente dès que la structure des échanges devient endogène.

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Bibliographic Info

Paper provided by LEG, Laboratoire d'Economie et de Gestion, CNRS UMR 5118, Université de Bourgogne in its series LEG - Document de travail - Economie with number 2003-10.

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Length: 53 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:lat:legeco:2003-10

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Keywords: unilateral trade; asymetry; agglomération; geography;

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  1. BEHRENS, Kristian, 2003. "International trade and internal geography revisited," LEG - Document de travail - Economie 2003-09, LEG, Laboratoire d'Economie et de Gestion, CNRS UMR 5118, Université de Bourgogne.
  2. 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.

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