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The effects of transport costs within the new economic geography

  • Olga Alonso-Villar

In the last few years a great number of works, involved in what has been called the New Economic Geography, have been focused on explaining the causes of agglomeration in a framework of monopolistic competition à la Dixit-Stiglitz. The purpose of this paper is to analyze, in the light of these theories, the spatial consequences of reductions in transport costs between locations (cities, regions and countries), showing the key assumptions which explain the differences between the results obtained in some of these works. The results show that the spatial pattern of production after these reductions strongly depend on the population’s mobility/immobility, on the dispersion force considered in the model and also on trade cost modeling.

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Paper provided by Universidade de Vigo, Departamento de Economía Aplicada in its series Working Papers with number 0502.

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Length: 40 pages
Date of creation: Feb 2005
Date of revision:
Handle: RePEc:vig:wpaper:0502
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  1. Martin, Philippe & Ottaviano, Gianmarco, 1996. "Growth and Agglomeration," CEPR Discussion Papers 1529, C.E.P.R. Discussion Papers.
    • Martin, Philippe & Ottaviano, Gianmarco I P, 2001. "Growth and Agglomeration," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(4), pages 947-68, November.
  2. Martin, Philippe & Rogers, Carol Ann, 1995. "Industrial location and public infrastructure," Journal of International Economics, Elsevier, vol. 39(3-4), pages 335-351, November.
  3. Olga Alonso-Villar & José-María Chamorro-Rivas & Xulia González-Cerdeira, 2001. "Agglomeration economies in manufacturing industries: the case of Spain," Working Papers 0202, Universidade de Vigo, Departamento de Economía Aplicada.
  4. Edward Glaeser & Janet Kohlhase, 2003. "Cities, regions and the decline of transport costs," Economics of Governance, Springer, vol. 83(1), pages 197-228, October.
  5. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  6. Monfort, Philippe & Nicolini, Rosella, 2000. "Regional Convergence and International Integration," Journal of Urban Economics, Elsevier, vol. 48(2), pages 286-306, September.
  7. Forslid, Rikard & Haaland, Jan I. & Midelfart Knarvik, Karen Helene, 2002. "A U-shaped Europe?: A simulation study of industrial location," Journal of International Economics, Elsevier, vol. 57(2), pages 273-297, August.
  8. Olga Alonso-Villar & Jos�-Mar�a Chamorro-Rivas, 2001. "How do producer services affect the location of manufacturing firms? The role of information accessibility," Environment and Planning A, Pion Ltd, London, vol. 33(9), pages 1621-1642, September.
  9. Paul Krugman, 1992. "A Dynamic Spatial Model," NBER Working Papers 4219, National Bureau of Economic Research, Inc.
  10. Krugman, Paul & Venables, Anthony J, 1994. "Globalization and the Inequality of Nations," CEPR Discussion Papers 1015, C.E.P.R. Discussion Papers.
  11. Picard, Pierre M. & Zeng, Dao-Zhi, 2005. "Agricultural sector and industrial agglomeration," Journal of Development Economics, Elsevier, vol. 77(1), pages 75-106, June.
  12. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 2002. "Taste heterogeneity, labor mobility and economic geography," Journal of Development Economics, Elsevier, vol. 69(1), pages 155-177, October.
  13. Elisenda Paluzie Hernandez, 1999. "Trade policy and regional inequalities," Working Papers in Economics 48, Universitat de Barcelona. Espai de Recerca en Economia.
  14. Olga Alonso Villar, 2004. "The effects of transport costs revisited," Working Papers 0407, Universidade de Vigo, Departamento de Economía Aplicada.
  15. Raul Livas Elizondo & Paul Krugman, 1992. "Trade Policy and the Third World Metropolis," NBER Working Papers 4238, National Bureau of Economic Research, Inc.
  16. Olga Alonso-Villar, 2001. "Metropolitan areas and public infrastructure," Investigaciones Economicas, Fundación SEPI, vol. 25(1), pages 139-169, January.
  17. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
  18. Bjorvatn, Kjetil, 1999. "Third World regional integration," European Economic Review, Elsevier, vol. 43(1), pages 47-64, January.
  19. Olga Alonso-Villar, 2002. "Urban agglomeration: Knowledge spillovers and product diversity," The Annals of Regional Science, Springer, vol. 36(4), pages 551-573.
  20. Monfort, Philippe & van Ypersele, Tanguy, 2003. "Integration, Regional Agglomeration and International Trade," CEPR Discussion Papers 3752, C.E.P.R. Discussion Papers.
  21. Masahisa Fujita & Paul Krugman, 2003. "The new economic geography: Past, present and the future," Economics of Governance, Springer, vol. 83(1), pages 139-164, October.
  22. Olga Alonso-Villar, 2001. "Large Metropolises in the Third World: An Explanation," Urban Studies, Urban Studies Journal Limited, vol. 38(8), pages 1359-1371, July.
  23. Schmutzler, Armin, 1999. " The New Economic Geography," Journal of Economic Surveys, Wiley Blackwell, vol. 13(4), pages 355-79, September.
  24. Luis Fernando Lanaspa & Fernando Sanz, 1999. "Krugman's Core-Periphery Model with Heterogeneous Quality of Land," Urban Studies, Urban Studies Journal Limited, vol. 36(3), pages 499-507, March.
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