Vasco Leite () (Faculdade de Economia, Universidade do Porto.) Sofia B.S.D. Castro () (CMUP and Faculdade de Economia, Universidade do Porto.) João Correia-da-Silva () (CEMPRE and Faculdade de Economia, Universidade do Porto.)
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We generalize the model of Krugman (1991) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs).
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Paper provided by Universidade do Porto, Faculdade de Economia do Porto in its series FEP Working Papers with number
287.
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 F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography) R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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James E. Anderson & Eric van Wincoop, 2004.
"Trade Costs,"
NBER Working Papers
10480, National Bureau of Economic Research, Inc.
[Downloadable!] (restricted)
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James E. Anderson & Eric van Wincoop, 2004.
"Trade Costs,"
Journal of Economic Literature,
American Economic Association, vol. 42(3), pages 691-751, September.
[Downloadable!] (restricted)
Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-FranÁois Thisse, 2002.
"Agglomeration and Trade Revisited,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 409-436, May.
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