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A Reflection On The Effects Of Transport Costs Within The New Economic Geography

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  • Olga Alonso-Villar

    () (Universidade de Vigo)

Abstract

The purpose of this paper is to analyze, in the light of recent contributions of New Economic Geography models, the spatial consequences of transport cost reductions. So far, the role of transport costs have been only partially unveiled, since papers focused either on the Dixit-Stiglitz-Iceberg framework or on the alternative framework put forth by Ottaviano et al. (2002)—which departs from the former in preferences and transport modelling. This paper goes a step further, offering a comprehensive view that includes the two approaches, in contexts both of two and of more than two locations. As opposed to other revisions of the literature, which have focused mainly on the centripetal forces included in these models, we emphasize the role of dispersion forces. The study suggests that in a two-location setting the results seem quite robust against changes in transportation modelling, so that considering either multiplicative transport costs or additive the predictions are identical. However, when allowing for a multilocation setup, the analysis becomes more complex.

Suggested Citation

  • Olga Alonso-Villar, 2006. "A Reflection On The Effects Of Transport Costs Within The New Economic Geography," Working Papers 57, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2006-57
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    File URL: http://www.ecineq.org/milano/WP/ECINEQ2006-57.pdf
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    References listed on IDEAS

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    Cited by:

    1. Stein Østbye, 2010. "Regional Policy Analysis In A Simple General Equilibrium Model With Vertical Linkages," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 756-775.
    2. Stanislav, Kološta & Ivan, Sokáč & Filip, Flaška & Mário, Hošala, 2008. "Analýza siete ŽP Group podľa vybraných oblastí skúmania Novej ekonomickej geografie a teórie učiacich sa regiónov," MPRA Paper 13977, University Library of Munich, Germany.

    More about this item

    Keywords

    agglomeration; dispersion; monopolistic competition; transport costs.;

    JEL classification:

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