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The core periphery model with asymmetric inter-regional and intra-regional trade costs

  • Vasco Leite

    ()

  • Sofia Castro

    ()

  • João Correia-da-Silva

    ()

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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File URL: http://hdl.handle.net/10.1007/s10258-009-0036-x
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Article provided by Springer in its journal Portuguese Economic Journal.

Volume (Year): 8 (2009)
Issue (Month): 1 (April)
Pages: 37-44

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Handle: RePEc:spr:portec:v:8:y:2009:i:1:p:37-44
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  1. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  2. Stephen Redding & Anthony J. Venables, 2001. "Economic geography and international inequality," LSE Research Online Documents on Economics 3714, London School of Economics and Political Science, LSE Library.
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  7. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
  8. Martin, Philippe & Rogers, Carol Ann, 1994. "Industrial Location and Public Infrastructure," CEPR Discussion Papers 909, C.E.P.R. Discussion Papers.
  9. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," The World Economy, Wiley Blackwell, vol. 21(6), pages 707-731, 08.
  10. Mori Mori, Tomoya & Turrini, Alessandro Antonio, 2000. "Skills, Agglomeration and Segmentation," CEPR Discussion Papers 2645, C.E.P.R. Discussion Papers.
  11. Murata, Yasusada, 2002. "Rural-urban interdependence and industrialization," Journal of Development Economics, Elsevier, vol. 68(1), pages 1-34, June.
  12. Mori, Tomoya, 1997. "A Modeling of Megalopolis Formation: The Maturing of City Systems," Journal of Urban Economics, Elsevier, vol. 42(1), pages 133-157, July.
  13. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," NBER Working Papers 10480, National Bureau of Economic Research, Inc.
  14. Mossay, Pascal, 2006. "The core-periphery model: A note on the existence and uniqueness of short-run equilibrium," Journal of Urban Economics, Elsevier, vol. 59(3), pages 389-393, May.
  15. Fujita, Masahisa & Mori, Tomoya, 1996. "The role of ports in the making of major cities: Self-agglomeration and hub-effect," Journal of Development Economics, Elsevier, vol. 49(1), pages 93-120, April.
  16. Vasco Leite & Sofia Castro & João Correia-da-Silva, 2009. "The core periphery model with asymmetric inter-regional and intra-regional trade costs," Portuguese Economic Journal, Springer, vol. 8(1), pages 37-44, April.
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