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Footloose Capital and Locational Advantage of a Hub

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  • Kikuchi, Toru

Abstract

The purpose of this study is to illustrate, with a simple three-region (located on a line), two-good (homogeneous good/differentiated high-tech products), two-factor (labor/``footloose'' capital) model, how falling transport costs can affect firms' location decisions and trade structure. It is shown that the locational advantage of a central hub is magnified via firms' location decisions.

Suggested Citation

  • Kikuchi, Toru, 2008. "Footloose Capital and Locational Advantage of a Hub," MPRA Paper 10415, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10415
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    References listed on IDEAS

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    JEL classification:

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

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