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The Geographic Effects of Trade Liberalization with Increasing Returns in Transportation

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  • Kashif S. Mansori

Abstract

This paper develops a model of economic geography that examines how the distribution of economic activity may change as a country opens up to foreign trade. The distinctive features of the model are that transportation is costly between locations within a nation as well as between nations, and that these transportation costs are subject to increasing returns to scale. A result of the model is that trade liberalization may cause the population of a country to become more concentrated in a single megalopolis. The large megalopolis may reduce welfare due to congestion costs, which implies that liberalization may unexpectedly leave the country worse off. Copyright Blackwell Publishing, Inc 2003

Suggested Citation

  • Kashif S. Mansori, 2003. "The Geographic Effects of Trade Liberalization with Increasing Returns in Transportation," Journal of Regional Science, Wiley Blackwell, vol. 43(2), pages 249-268.
  • Handle: RePEc:bla:jregsc:v:43:y:2003:i:2:p:249-268
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    Cited by:

    1. Cem Karayalcin & Hakan Yilmazkuday, 2015. "Trade and Cities," World Bank Economic Review, World Bank Group, vol. 29(3), pages 523-549.
    2. Haddad, Eduardo A. & Hewings, Geoffrey J.D., 2005. "Market imperfections in a spatial economy: some experimental results," The Quarterly Review of Economics and Finance, Elsevier, vol. 45(2-3), pages 476-496, May.
    3. Larch, Mario, 2007. "The multinationalization of the transport sector," Journal of Policy Modeling, Elsevier, vol. 29(3), pages 397-416.
    4. Mauricio Ramírez Grajeda & Ian M. Sheldon, 2015. "Trade Openness and City Interaction," World Scientific Book Chapters,in: THE REGION AND TRADE New Analytical Directions, chapter 10, pages 267-318 World Scientific Publishing Co. Pte. Ltd..
    5. Stefan Gruber & Luigi Marattin, 2010. "Taxation, infrastructure and endogenous trade costs in new economic geography," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 203-222, March.
    6. Eduardo Amaral Haddad & Fernando Salgueiro Perobelli, 2004. "Trade Liberalization And Regional Inequality: Do Transportation Costs Impose A Spatial Poverty Trap?," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 131, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. CRESPO, Nuno & FONTOURA, Maria Paula, 2013. "Regional Integration And Internal Economic Geography - An Empirical Evaluation With Portuguese Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(2), pages 99-116.
    8. Eduardo Haddad & Geoffrey Hewings, 2004. "Transportation Costs, Increasing Returns and Regional Growth: An Interregional CGE Analysis," ERSA conference papers ersa04p461, European Regional Science Association.
    9. Maarten Bosker & Waldo Krugell, 2008. "Regional Income Evolution In South Africa After Apartheid," Journal of Regional Science, Wiley Blackwell, vol. 48(3), pages 493-523.
    10. Marius Brülhart, 2011. "The spatial effects of trade openness: a survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 147(1), pages 59-83, April.
    11. Olga Alonso-Villar, 2006. "A Reflection On The Effects Of Transport Costs Within The New Economic Geography," Working Papers 57, ECINEQ, Society for the Study of Economic Inequality.
    12. Marcin Bogdanski, 2012. "Modern Theories Of Regional Development – A Review Of Some Concepts," Oeconomia Copernicana, Institute of Economic Research, vol. 3(2), pages 25-41, June.
    13. Ramírez Grajeda, Mauricio & de León Arias, Adrián, 2009. "Spatial implications of international trade under the new economic geography approach," MPRA Paper 18076, University Library of Munich, Germany.
    14. Nuno Crespo & Maria Paula Fontoura, 2008. "Regional Integration and International Economic Geography in the Portuguese Case - an update," Working Papers Department of Economics 2008/51, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.

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