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Trade Protection and the Location of Production

Author

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  • Thede, Susanna

    (Department of Economics, Lund University)

Abstract

This study examines the economic role of trade protection in a new economic geography model where countries have no inherent differences in endowments, preferences or technologies. This is done in two ways. First, the effects of agricultural and manufacturing protection on the set of equilibria are obtained. Second, the endogenous trade policy positions resulting from a game between national welfare-maximising governments are identified. The model used is a Krugman & Venables (1995) model modified to incorporating agricultural trade costs. Therefore, an additional contribution is the examination of the effect of agricultural trade costs on the equilibrium structure of the model.

Suggested Citation

  • Thede, Susanna, 2002. "Trade Protection and the Location of Production," Working Papers 2002:15, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2002_015
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    File URL: http://project.nek.lu.se/publications/workpap/Papers/WP02_15.pdf
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    References listed on IDEAS

    as
    1. Fredrik Andersson & Rikard Forslid, 2003. "Tax Competition and Economic Geography," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 279-303, April.
    2. Davis, Donald R, 1998. "The Home Market, Trade, and Industrial Structure," American Economic Review, American Economic Association, vol. 88(5), pages 1264-1276, December.
    3. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
    4. Kind, Hans Jarle & Knarvik, Karen Helene Midelfart & Schjelderup, Guttorm, 2000. "Competing for capital in a 'lumpy' world," Journal of Public Economics, Elsevier, vol. 78(3), pages 253-274, November.
    5. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    6. Puga, Diego & Venables, Anthony J., 1997. "Preferential trading arrangements and industrial location," Journal of International Economics, Elsevier, vol. 43(3-4), pages 347-368, November.
    7. Puga, Diego & Venables, Anthony J, 1999. "Agglomeration and Economic Development: Import Substitution vs. Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 109(455), pages 292-311, April.
    8. Ronald D. Fischer & Pablo Serra, 1996. "Income Inequality and Choice of Free Trade in a Model of Intraindustry Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 41-64.
    9. Baldwin, Richard E. & Krugman, Paul, 2004. "Agglomeration, integration and tax harmonisation," European Economic Review, Elsevier, vol. 48(1), pages 1-23, February.
    10. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics,in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455 Elsevier.
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    More about this item

    Keywords

    new economic geography; endogenous trade policies; agricultural trade costs;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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