IDEAS home Printed from https://ideas.repec.org/a/bla/metroe/v72y2021i1p148-172.html
   My bibliography  Save this article

Obtaining a hub position: A New Economic Geography analysis of industry location and trade network structures

Author

Listed:
  • P. Commendatore
  • I. Kubin
  • I. Sushko

Abstract

We present a linear New Economic Geography model with three regions, one remote region and two regions that entertain a trade agreement with low bilateral trade costs. Only one of these two integrated regions has the outside option to conclude an additional trade agreement with the remote region and to obtain a hub position. We show that the new trade agreement has a substantial impact on industry location and trade patterns and that the effects strongly depend upon level of integration between the initial two regions. It is not always the region with the outside option that profits from using it. Finally, we also show that higher firm mobility may lead to complex dynamics.

Suggested Citation

  • P. Commendatore & I. Kubin & I. Sushko, 2021. "Obtaining a hub position: A New Economic Geography analysis of industry location and trade network structures," Metroeconomica, Wiley Blackwell, vol. 72(1), pages 148-172, February.
    • Handle: RePEc:bla:metroe:v:72:y:2021:i:1:p:148-172
    DOI: 10.1111/meca.12314
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/meca.12314
    Download Restriction: no
    File URL: https://libkey.io/10.1111/meca.12314?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stephen J. Redding & Esteban Rossi-Hansberg, 2017. "Quantitative Spatial Economics," Annual Review of Economics, Annual Reviews, vol. 9(1), pages 21-58, September.
    2. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-François Thisse, 2021. "Agglomeration And Trade Revisited," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 3, pages 59-85, World Scientific Publishing Co. Pte. Ltd..
    3. Darby, Julia & Ferrett, Ben & Wooton, Ian, 2014. "Regional centrality and tax competition for FDI," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 84-92.
    4. Thisse, Jacques-François & Tabuchi, Takatoshi, 2002. "Regional Specialization and Transport Costs," CEPR Discussion Papers 3542, C.E.P.R. Discussion Papers.
    5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    6. Behrens, Kristian & Lamorgese, Andrea R. & Ottaviano, Gianmarco I.P. & Tabuchi, Takatoshi, 2009. "Beyond the home market effect: Market size and specialization in a multi-country world," Journal of International Economics, Elsevier, vol. 79(2), pages 259-265, November.
    7. Pasquale Commendatore & Ingrid Kubin & Iryna Sushko, 2018. "The impact of Brexit on trade patterns and industry location: a NEG analysis," Department of Economics Working Papers wuwp267, Vienna University of Economics and Business, Department of Economics.
    8. World Bank, 2005. "Global Economic Prospects 2005 : Trade, Regionalism and Development," World Bank Publications - Books, The World Bank Group, number 14783, April.
    9. William Martin & Cong S. Pham, 2020. "Estimating the gravity model when zero trade flows are frequent and economically determined," Applied Economics, Taylor & Francis Journals, vol. 52(26), pages 2766-2779, May.
    10. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 441-487.
    11. George Deltas & Klaus Desmet & Giovanni Facchini, 2012. "Hub‐and‐spoke free trade areas: theory and evidence from Israel," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(3), pages 942-977, August.
    12. Behrens, Kristian & Lamorgese, Andrea R. & Ottaviano, Gianmarco I.P. & Tabuchi, Takatoshi, 2009. "Beyond the home market effect: Market size and specialization in a multi-country world," Journal of International Economics, Elsevier, vol. 79(2), pages 259-265, November.
    13. Gert-Jan M. Linders & Henri L.F. de Groot, 2006. "Estimation of the Gravity Equation in the Presence of Zero Flows," Tinbergen Institute Discussion Papers 06-072/3, Tinbergen Institute.
    14. G.J.M. Linders, 2006. "Estimation of the Gravity Equation of Bilateral Trade in the Presence of Zero Flows," ERSA conference papers ersa06p746, European Regional Science Association.
    15. Silvia Sopranzetti, 2018. "Overlapping free trade agreements and international trade: A network approach," The World Economy, Wiley Blackwell, vol. 41(6), pages 1549-1566, June.
    16. Carlo Altomonte, 2007. "Regional Economic Integration and the Location of Multinational Firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(2), pages 277-305, July.
    17. 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.
    18. Takanori Ago & Ikumo Isono & Takatoshi Tabuchi, 2006. "Locational disadvantage of the hub," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(4), pages 819-848, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.
    2. Miren Lafourcade & Jacques-François Thisse, 2011. "New Economic Geography: The Role of Transport Costs," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 4, Edward Elgar Publishing.
    3. Nuria Gallego & José L. Zofío, 2018. "Trade Openness, Transport Networks and the Spatial Location of Economic Activity," Networks and Spatial Economics, Springer, vol. 18(1), pages 205-236, March.
    4. Jian Wang & Junqian Xu, 2015. "Home market effect, spatial wages disparity: an empirical reinvestigation of China," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(2), pages 313-333, December.
    5. Marcus Berliant & Takatoshi Tabuchi, 2025. "Market size, trade, and productivity reconsidered: poverty traps and the home market effect," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(1), pages 99-124, April.
    6. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    7. Garcia Pires, Armando J., 2013. "Home market effects with endogenous costs of production," Journal of Urban Economics, Elsevier, vol. 74(C), pages 47-58.
    8. Juan Carlos Lopez & Tadashi Morita, 2023. "Inter‐ and intraregional inequality in a spatial economy," Journal of Regional Science, Wiley Blackwell, vol. 63(4), pages 981-1000, September.
    9. Paolo Sgrignoli & Rodolfo Metulini & Zhen Zhu & Massimo Riccaboni, 2017. "The Indirect Effects of FDI on Trade: A Network Perspective," Papers 1705.02187, arXiv.org.
    10. Al-Maamari, Aaisha & Countryman, Amanda M., 2021. "Infrastructure and Agricultural Trade in North and Latin America," Journal of Food Distribution Research, Food Distribution Research Society, vol. 52(2), July.
    11. Xi Yang & Nobuaki Hamaguchi, 2013. "Trade infrastructure and firm location under Cournot competition," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 153-167, February.
    12. Harms, Philipp & Shuvalova, Daria, 2020. "Cultural distance and international trade in services: A disaggregate view," Economic Systems, Elsevier, vol. 44(2).
    13. Mireille NTSAMA ETOUNDI, 2014. "Impact de la rente pétrolière sur la demande des pays frontaliers du Cameroun," Working Papers 201417, CERDI.
    14. Toshiaki Takahashi & Hajime Takatsuka & Dao-Zhi Zeng, 2013. "Spatial inequality, globalization, and footloose capital," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 213-238, May.
    15. Kristian Behrens, 2005. "Choix de localisation et structure du commerce intra-branche," Revue économique, Presses de Sciences-Po, vol. 56(4), pages 965-982.
    16. Rahel Aichele, 2013. "Trade, Climate Policy and Carbon Leakage - Theory and Empirical Evidence," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 49, May.
    17. Maria Cipollina & Federica Demaria & Filomena Pietrovito, 2016. "Determinants of Trade: the Role of Innovation in Presence of Quality Standards," Journal of Industry, Competition and Trade, Springer, vol. 16(4), pages 455-475, December.
    18. Imen Ghattassi & David Dosso & Francisco Serranito, 2025. "Determinants of International Climate Finance: A Gravity Panel Model Approach," Working Papers hal-04984013, HAL.
    19. Henk L. M. Kox, 2013. "Export Decisions of Services Firms Between Agglomeration Effects and Market-Entry Costs," Advances in Spatial Science, in: Juan R. Cuadrado-Roura (ed.), Service Industries and Regions, edition 127, chapter 0, pages 177-201, Springer.
    20. Barbero, Javier & Zofío, José Luis, 2012. "The multiregional core-periphery model: The role of the spatial topology," Working Papers in Economic Theory 2012/12, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:metroe:v:72:y:2021:i:1:p:148-172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0026-1386 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.