The effects of transport costs revisited
The aim of this paper is to study the location decisions of upstream and downstream industries when transport costs in each sector are analyzed separately. By using a new economic geography model built on Venables (1996), it will be shown that the effects of cost reductions in transporting final goods are different from those in intermediate goods. Our analysis suggests that regional convergence is more the consequence of improvements in transportation between upstream and downstream firms than those between firms and consumers. This will help us to better understand the forces driving this kind of model while giving an additional explanation to the differences between Krugman’s (1991) results and those of Venables (1996).
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- Stephen Redding & Anthony J. Venables, 2001.
"Economic geography and international inequality,"
LSE Research Online Documents on Economics
3714, London School of Economics and Political Science, LSE Library.
- Redding, Stephen J. & Venables, Anthony J, 2000. "Economic Geography and International Inequality," CEPR Discussion Papers 2568, C.E.P.R. Discussion Papers.
- Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," CEP Discussion Papers dp0495, Centre for Economic Performance, LSE.
- Stephen Redding & Anthony J. Venables, 2001. "Economic Geography and International Inequality," International Trade 0103003, EconWPA.
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