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Inter-regional and International Trade: Seventy Years After Ohlin

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  • Behrens, Kristian
  • Gaigné, Carl
  • Ottaviano, Gianmarco
  • Thisse, Jacques-François

Abstract

We study the impact of falling trade costs and falling national transport costs on the economic geography of countries involved in an integration process. Two regions between which labour is mobile form each country, but there is no international factor mobility. Commodities can be traded both nationally and internationally at positive but different costs. In our setting, a decrease in trade costs and/or in national transport costs has direct impact on prices and wages in both countries. This allows us to study how the variations of these parameters affect the terms of trade and the levels of welfare, as well as to account for their impact on the economic geography of each country in a way that significantly differs from what has been accomplished so far.

Suggested Citation

  • Behrens, Kristian & Gaigné, Carl & Ottaviano, Gianmarco & Thisse, Jacques-François, 2003. "Inter-regional and International Trade: Seventy Years After Ohlin," CEPR Discussion Papers 4065, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4065
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    Cited by:

    1. Egger, Hartmut & Egger, Peter, 2007. "Outsourcing and trade in a spatial world," Journal of Urban Economics, Elsevier, vol. 62(3), pages 441-470, November.
    2. Ugo Fratesi, 2008. "Regional policy from a supra-regional perspective," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(3), pages 681-703, September.
    3. Ulltveit-Moe, Karen Helene, 2007. "Regional policy design: An analysis of relocation, efficiency and equity," European Economic Review, Elsevier, vol. 51(6), pages 1443-1467, August.
    4. Miren Lafourcade & Elisenda Paluzie Hernandez, 2005. "European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions," Working Papers in Economics 145, Universitat de Barcelona. Espai de Recerca en Economia.
    5. Christian Volpe Martincus, 2010. "Spatial Effects Of Trade Policy: Evidence From Brazil," Journal of Regional Science, Wiley Blackwell, vol. 50(2), pages 541-569.
    6. Beltramo, Theresa, 2010. "Changes in Bilateral Trade Costs between European Union Member States & Major Trading Partners: An Empirical Analysis from 1989 - 2006," MPRA Paper 24259, University Library of Munich, Germany.
    7. Sanguinetti, Pablo & Volpe Martincus, Christian, 2009. "Tariffs and manufacturing location in Argentina," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 155-167, March.
    8. Marius Brülhart & Matthieu Crozet & Pamina Koenig, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," The World Economy, Wiley Blackwell, vol. 27(6), pages 853-875, June.
    9. Pedro Moncarz & Michael Bleaney, 2010. "The Regional Impact of Trade Liberalization in a Model with Congestion Costs a la Helpman," Regional Studies, Taylor & Francis Journals, vol. 44(8), pages 935-947.
    10. Candau Fabien, 2005. "Lumpy World and Race to the Bottom," International Trade 0508008, EconWPA, revised 20 Feb 2006.
    11. Kieran P. Donaghy, 2012. "The Co-evolution of Logistics, Globalization and Spatial Price Competition: Implications for a Unified Theory of Trade and Location," Chapters,in: Globalization Trends and Regional Development, chapter 3 Edward Elgar Publishing.
    12. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2006. "Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 613-635, September.
    13. Patricio Aroca & Mariano Bosch & William F. Maloney, 2005. "Spatial Dimensions of Trade Liberalization and Economic Convergence: Mexico 1985--2002," World Bank Economic Review, World Bank Group, vol. 19(3), pages 345-378.
    14. Gáname, María Cecilia, 2005. "The effects of endogenous protection on the economic landscape," IOB Working Papers 2005.01, Universiteit Antwerpen, Institute of Development Policy (IOB).
    15. Souleymane COULIBALY, 2006. "Persistent Uneven Spread of Economic Activities within Developing RIAs," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 06.01, Université de Lausanne, Faculté des HEC, DEEP.
    16. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany.

    More about this item

    Keywords

    agglomeration; economic geography; trade costs; transport costs;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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