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Oil Prices, Geography and Endogenous Regionalism: Too Much Ado About (Almost) Nothing

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  • Daniel Mirza
  • Habib Zitouna

Abstract

This paper studies the effect of oil prices on the geography of international trade. We model transport costs as a function of variable and fixed costs. By affecting the first cost component, oil prices can then modify the structure of transportation costs across partners. This, we argue, acts as a factor of distortion in relative prices, thereby creating a reallocation of trade at the expense of remote countries. In that respect, an increase in oil prices should favor regionalism.

Suggested Citation

  • Daniel Mirza & Habib Zitouna, 2009. "Oil Prices, Geography and Endogenous Regionalism: Too Much Ado About (Almost) Nothing," Working Papers 2009-26, CEPII research center.
  • Handle: RePEc:cii:cepidt:2009-26
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    References listed on IDEAS

    as
    1. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 282-306, May.
    2. David Hummels & Alexandre Skiba, 2004. "Shipping the Good Apples Out? An Empirical Confirmation of the Alchian-Allen Conjecture," Journal of Political Economy, University of Chicago Press, vol. 112(6), pages 1384-1402, December.
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    Cited by:

    1. David von Below & Pierre-Louis Vézina, 2016. "The Trade Consequences of Pricey Oil," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 64(2), pages 303-318, June.
    2. Mehdi Ben Slimane & Marilyne Huchet-Bourdon & Habib Zitouna, 2016. "Do FDI inflows and energy price affect the food import dependency in developing countries? Evidence from panel VAR Models," Working Papers SMART - LERECO 16-04, INRA UMR SMART-LERECO.

    More about this item

    Keywords

    REGIONALISM; OIL PRICES; GEOGRAPHY; TRANSPORT;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F19 - International Economics - - Trade - - - Other
    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • L91 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Transportation: General

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