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Trade Costs and the Agglomeration of Production

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  • Cafiso, Gianluca

    ()
    (University of Catania)

Abstract

The object of this paper is to study the evolution of trade costs and of the agglomeration of production, as well as their relation. The Home Market Effect prescribes increasing agglomeration when trade costs decrease because it is supposed to strengthen. We study the joint variation of trade costs and agglomeration in all the sectors that we consider, and specifically in those which support the home market effect hypothesis. We employ an original approach based on the combination of different bootstrap distributions. Our analysis yields insights into the evolution of trade costs and agglomeration in Europe in the last decade.

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File URL: http://www.demq.unict.it/db/Allegati/WP_2010_07-Cafiso_merged.pdf
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Bibliographic Info

Paper provided by University of Catania, Department of Economics and Quantitative Methods in its series DEMQ Working Paper Series with number 2010/7.

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Length: 29 pages
Date of creation: 22 Dec 2010
Date of revision:
Handle: RePEc:ris:demqwp:2010_007

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Related research

Keywords: Trade Costs; Agglomeration of Production; Home Market Effect; Bootstrap;

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Cited by:
  1. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.
  2. Churen Sun & Zhihao Yu & Tao Zhang, 2012. "Agglomeration, Productivity, and Firms¡® Exports: Evidence from Chinese Firm-level Data," ERSA conference papers ersa12p882, European Regional Science Association.

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