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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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    3. Masahisa Fujita & Tomoya Mori, 2005. "Frontiers of the New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 377-405, August.
    4. 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.
    5. Candau Fabien, 2005. "Lumpy World and Race to the Bottom," International Trade 0508008, University Library of Munich, Germany, revised 20 Feb 2006.
    6. Li, Muqun & Coxhead, Ian, 2009. "Trade, Technology and Inequality in a Developing Country: Theory and Evidence from China," Staff Paper Series 539, University of Wisconsin, Agricultural and Applied Economics.
    7. Kristian Behrens, 2006. "Do changes in transport costs and tariffs shape the space‐economy in the same way?," Papers in Regional Science, Wiley Blackwell, vol. 85(3), pages 379-399, August.
    8. 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: Roberta Capello & Tomaz Ponce Dentinho (ed.), Globalization Trends and Regional Development, chapter 3, Edward Elgar Publishing.
    9. CRESPO, Nuno & FONTOURA, Maria Paula, 2013. "Regional Integration And Internal Economic Geography - An Empirical Evaluation With Portuguese Data," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 13(2), pages 99-116.
    10. 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.
    11. 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.
    12. Nuno Crespo & Maria Paula Fontoura, 2008. "Regional Integration and International Economic Geography in the Portuguese Case - an update," Working Papers Department of Economics 2008/51, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    13. 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.
    14. 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.
    15. Christian Volpe Martincus, 2010. "Spatial Effects Of Trade Policy: Evidence From Brazil," Journal of Regional Science, Wiley Blackwell, vol. 50(2), pages 541-569, May.
    16. 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.
    17. 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.
    18. 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.
    19. Patricio Aroca & Mariano Bosch & William F. Maloney, 2005. "Spatial Dimensions of Trade Liberalization and Economic Convergence: Mexico 1985--2002," The World Bank Economic Review, World Bank Group, vol. 19(3), pages 345-378.
    20. 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).
    21. Souleymane COULIBALY, 2006. "Persistent Uneven Spread of Economic Activities within Developing RIAs," Cahiers de Recherches Economiques du Département d'économie 06.01, Université de Lausanne, Faculté des HEC, Département d’économie.
    22. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany.

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    More about this item

    Keywords

    agglomeration; economic geography; trade costs; transport costs;
    All these keywords.

    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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