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Changes in Infrastructure and Tariff Barriers: Local Vs. Global Impacts

Author

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  • Ottaviano, Gianmarco
  • Lamorgese, Andrea
  • Tabuchi, Takatoshi
  • Behrens, Kristian

Abstract

We develop a multi-country Dixit-Stiglitz model to investigate the impacts of: (i) changes in the international distribution of consumers' expenditure; (ii) decreasing tariffs; and (iii) improvements in transportation infrastructure. We show that, in general, decreasing tariff barriers do not allow for any clear predictions regarding changes in industry location and welfare, whereas this is possible with respect to improvements in transportation infrastructure. In particular, infrastructural improvements have spatially limited impacts when the transportation network is locally described by a tree. Any decrease in transport costs is Pareto welfare enhancing in this case.

Suggested Citation

  • Ottaviano, Gianmarco & Lamorgese, Andrea & Tabuchi, Takatoshi & Behrens, Kristian, 2005. "Changes in Infrastructure and Tariff Barriers: Local Vs. Global Impacts," CEPR Discussion Papers 5103, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5103
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    References listed on IDEAS

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    6. Takatoshi Tabuchi & Kristian Behrens & Andrea R. Lamorgese, 2004. "Testing the Home Market Effects in a Multi-country World: The Theory," Econometric Society 2004 Far Eastern Meetings 595, Econometric Society.
    7. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    8. Behrens, Kristian & Gaigne, Carl & Ottaviano, Gianmarco I.P. & Thisse, Jacques-Francois, 2007. "Countries, regions and trade: On the welfare impacts of economic integration," European Economic Review, Elsevier, vol. 51(5), pages 1277-1301, July.
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    Cited by:

    1. J. Suedekum, 2007. "Identifying the dynamic home market effect in a three-country model," Journal of Economics, Springer, vol. 92(3), pages 209-228, December.
    2. Masahisa Fujita & Tomoya Mori, 2005. "Frontiers of the New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 84(3), pages 377-405, August.
    3. Andrea R. Lamorgese, 2008. "Innovation driven sectoral shocks and aggregate city cycles," Temi di discussione (Economic working papers) 667, Bank of Italy, Economic Research and International Relations Area.
    4. Frédéric Robert-Nicoud, 2006. "Agglomeration and Trade with Input–Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(1), pages 101-126.

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    More about this item

    Keywords

    Multi-country trade models; Imperfect competition; Transportation networks; International integration; Home market effect;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • 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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