Regional Economies of Scale in Transportation and Regional Welfare
A discriminatory tariff can be welfare superior to free trade in the presence of regional economies of scale. This is because a tariff on non-regional trade concentrates trade within a region, lowering the cost of transportation, so that the gains from economies of scale can theoretically offset the losses from the tariff. To complement the theoretical point I estimate the relation between transportation cost and regional volume of trade. The estimates suggest that a 10% increase in the volume of trade brings about 2.5% reduction in transportation cost in the long run.
|Date of creation:||Sep 2007|
|Date of revision:||Sep 2007|
|Contact details of provider:|| Postal: |
Phone: (785) 864-3501
Fax: (785) 864-5270
Web page: http://www2.ku.edu/~kuwpaper/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hummels, David, 2001.
"Time as a Trade Barrier,"
GTAP Working Papers
1152, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
- Didier Laussel & Raymond Riezman, 2006. "Fixed Transport Costs and International Trade," CESifo Working Paper Series 1764, CESifo Group Munich.
- Antonio Spilimbergo & Ernesto Stein, 1998.
"The Welfare Implications of Trading Blocs among Countries with Different Endowments,"
in: The Regionalization of the World Economy, pages 121-152
National Bureau of Economic Research, Inc.
- Antonio Spilimbergo & Ernesto Stein, 1996. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," NBER Working Papers 5472, National Bureau of Economic Research, Inc.
- Antonio Spilimbergo & Ernesto H. Stein, 1996. "The Welfare Implications of Trading Blocs among Countries with Different Endowments," IDB Publications (Working Papers) 6860, Inter-American Development Bank.
- 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.
- Jacek Cukrowski & Manfred M. Fischer, 2000. "Theory of Comparative Advantage: Do Transportation Costs Matter?," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 311-322.
- Casas, Fran?ois R. & Choi, E. Kwan, 1990. "Transport Innovation and Welfare Under Variable Returns to Scale," Staff General Research Papers 278, Iowa State University, Department of Economics.
When requesting a correction, please mention this item's handle: RePEc:kan:wpaper:200705. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jianbo Zhang)
If references are entirely missing, you can add them using this form.