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Do changes in transport costs and tariffs shape the space-economy in the same way?

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  • BEHRENS, Kristian

Abstract

. We investigate how alternative ways of modelling trade costs affect the main results of “new” economic geography. In order to do so, we compare the impacts of falling transport costs and decreasing tariffs on the spatial distribution of economic activities. Our analysis reveals that tariffs and transport costs largely play symmetric roles, in the sense that a decrease in either of them favours agglomeration. Yet, tariffs generate rents which, once redistributed or used to finance local public goods, make dispersion sustainable over a larger range of parameter values. Therefore, decreasing transport costs are more likely to trigger agglomeration than decreasing tariffs.
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Suggested Citation

  • BEHRENS, Kristian, 2006. "Do changes in transport costs and tariffs shape the space-economy in the same way?," LIDAM Reprints CORE 1949, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1949
    DOI: 10.1111/j.1435-5957.2006.00093.x
    Note: In : Papers in Regional Science, 85(3), 379-399, 2006
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    Cited by:

    1. 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.
    2. Kristian Behrens & Frédéric Robert‐Nicoud, 2009. "Krugman's Papers in Regional Science: The 100 dollar bill on the sidewalk is gone and the 2008 Nobel Prize well‐deserved," Papers in Regional Science, Wiley Blackwell, vol. 88(2), pages 467-489, June.
    3. Olga Alonso‐Villar, 2008. "A model of economic geography with demand‐pull and congestion costs," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 261-276, June.
    4. Miren Lafourcade & Jacques-François Thisse, 2008. "New economic geography: A guide to transport analysis," PSE Working Papers halshs-00586878, HAL.
    5. César Ducruet & Hidekazu Itoh & Olivier Joly, 2015. "Ports and the local embedding of commodity flows," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 607-627, August.

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