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Which Firms are Left in the Periphery? - Spatial Sorting of Heterogeneous Firms with Scale Economies in Transportation

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  • Forslid, Rikard

    (Dept. of Economics, Stockholm University)

  • Okubo, Toshihiro

    () (Kobe University)

Abstract

This paper introduces scale economies or density economies in transportation in a trade and geography model with heterogeneous firms. This relatively small change to the standard model produces a new pattern of spatial sorting among …firms. Contrary to the existing literature, our model produces the result that firms of intermediate productivity relocate to the large core region, whereas high and low productivity firms remain in the periphery. Trade liberalisation leads to a gradual relocation to the core, with the most productive firms remaining in the periphery.

Suggested Citation

  • Forslid, Rikard & Okubo, Toshihiro, 2013. "Which Firms are Left in the Periphery? - Spatial Sorting of Heterogeneous Firms with Scale Economies in Transportation," Research Papers in Economics 2013:9, Stockholm University, Department of Economics.
  • Handle: RePEc:hhs:sunrpe:2013_0009
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    Cited by:

    1. ISHIKAWA, Jota & TARUI, Norio, 2017. "Backfiring with Backhaul Problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-57, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    2. Kaitila, Ville, 2013. "Specialisation and/or Convergence: Structure of European Exports and Production," ETLA Working Papers 12, The Research Institute of the Finnish Economy.
    3. Steven Brakman & Charles Marrewijk & Mark Partridge, 2015. "Local Consequences Of Global Production Processes," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 1-9, January.
    4. Shahbaz, Muhammad & Nasreen, Samia & Ahmed, Khalid & Hammoudeh, Shawkat, 2017. "Trade openness–carbon emissions nexus: The importance of turning points of trade openness for country panels," Energy Economics, Elsevier, vol. 61(C), pages 221-232.
    5. ISHIKAWA, Jota & TARUI, Nori, 2015. "Backfiring with backhaul problems: Trade and Industrial Policies with Endogenous Transport Costs," Discussion paper series HIAS-E-12, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    6. Masashige Hamano & Wessel N. Vermeulen, "undated". "Adapting to within-country export barriers: Evidence from the Japan 2011 Tsunami," Working Papers 1706, Waseda University, Faculty of Political Science and Economics.
    7. Rikard Forslid & Toshihiro Okubo, 2016. "Big is Beautiful when Exporting," Review of International Economics, Wiley Blackwell, vol. 24(2), pages 330-343, May.

    More about this item

    Keywords

    heterogeneous …firms; transportation costs; scale economies;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration

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