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Asymmetric trade and agglomeration

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  • Kristian Behrens

    (LATEC - Laboratoire d'Analyse et de Techniques Economiques [UMR 5118] - UB - Université de Bourgogne - CNRS - Centre National de la Recherche Scientifique)

Abstract

We extend the quadratic utility approach by Ottaviano et al. [19] and byBehrens [1] to the range of intermediate values of transport costs in orderto investigate how asymmetric trade affects the regional distribution ofeconomic activities. Asymmetry in trade is an endogenous result of pricecompetition and transport costs: depending on both the spatial distribution offirms and the value of transport costs, only firms located in one of the tworegions can profitably access the foreign market, which gives rise to morecomplex patterns of trade. We show that the unilateral breaking of autarkygives rise to strong agglomeration forces which lead to the absorption of thesmaller regions' industry. Further, the number of equilibria increases oncethe structure of trade is endogenously accounted for. (FRE) Nous étendons le modèle quadratique de Ottaviano et al. [19] et Behrens [1] aux valeurs intermédiaires de coûts de transport afin d'examiner la manière dont le commerce asymétrique affecte la répartition régionale de l'activité économique. L'asymétrie dans le commerce est un résultat endogène dela compétition en prix et de l'existence de coûts de transport. Suivant larépartition spatiale des finîtes et les valeurs des coûts de transport, seules lesfirmes installées dans l'une des deux régions peuvent accéder aux marchésextérieurs, ce qui résulte en des structures d'échanges plus complexes. Nousmontrons que l'abandon unilatéral de l'autarcie donne naissance à de fortesforces d'agglomération, lesquelles mènent à l'absorption de l'industrie de lapetite région. De plus, le nombre d'équilibres augmente dès que la structuredes échanges devient endogène.

Suggested Citation

  • Kristian Behrens, 2003. "Asymmetric trade and agglomeration," Working Papers hal-01526520, HAL.
  • Handle: RePEc:hal:wpaper:hal-01526520
    Note: View the original document on HAL open archive server: https://hal.science/hal-01526520
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    References listed on IDEAS

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    1. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-François Thisse, 2021. "Agglomeration And Trade Revisited," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 3, pages 59-85, World Scientific Publishing Co. Pte. Ltd..
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    4. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608, Elsevier.
    5. Ginsburgh, Victor & Papageorgiou, Yorgo & Thisse, Jacques-Francois, 1985. "On existence and stability of spatial equilibria and steady-states," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 149-158, June.
    6. OTTAVIANO, Gianmarco I.P. & THISSE, Jacques-François, 2001. "On economic geography in economic theory: increasing returns and pecuniary externalities," LIDAM Reprints CORE 1506, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Keith Head & John Ries, 2001. "Increasing Returns versus National Product Differentiation as an Explanation for the Pattern of U.S.-Canada Trade," American Economic Review, American Economic Association, vol. 91(4), pages 858-876, September.
    8. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2002. "Some Empirical Regularities of Spatial Economies: A Relationship between Industrial Location and City Size," KIER Working Papers 551, Kyoto University, Institute of Economic Research.
    9. Konishi, Hideo, 2000. "Formation of Hub Cities: Transportation Cost Advantage and Population Agglomeration," Journal of Urban Economics, Elsevier, vol. 48(1), pages 1-28, July.
    10. Winters, L. Alan & Chang, Won, 2000. "Regional integration and import prices: an empirical investigation," Journal of International Economics, Elsevier, vol. 51(2), pages 363-377, August.
    11. Huriot,Jean-Marie & Thisse,Jacques-François (ed.), 2000. "Economics of Cities," Cambridge Books, Cambridge University Press, number 9780521641906.
    12. Mori, Tomoya & Nishikimi, Koji, 2002. "Economies of transport density and industrial agglomeration," Regional Science and Urban Economics, Elsevier, vol. 32(2), pages 167-200, March.
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    Cited by:

    1. Kristian Behrens, 2003. "International trade and internal geography revisited," Working Papers hal-01526511, HAL.
    2. Takanori Ago & Ikumo Isono & Takatoshi Tabuchi, 2003. "Locational Disadvantage and Losses from Trade: Three Regions in Economic Geography," CIRJE F-Series CIRJE-F-224, CIRJE, Faculty of Economics, University of Tokyo.

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    More about this item

    Keywords

    Agglomeration; Asymmetry; Geography; Ulinateral trade;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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