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Spatial effects of transport infrastructure: The role of market structure

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  • Bröcker, Johannes

Abstract

Theoretical reasoning shows that spatial effects of transport cost reductions may crucially depend on market structures in the tradables sector (degree of market power, strength of economies of scale, free or no free entry). The aim of this paper is to compare empirically the effects of transport cost reductions due to infrastructure investments, emerging under different market structures. To this end, a computable spatial general equilibrium model with costly interregional trade is presented, which is calibrated for a large number of regions covering Europe. Applying this model, transport cost reductions are simulated under two different assumptions with regard to the market structure prevailing in the tradables sector: (1) perfect competition with constant returns to scale, and (2) monopolistic competition with increasing returns and free entry. Results are compared in terms of money-metric measures of regional welfare changes.

Suggested Citation

  • Bröcker, Johannes, 1998. "Spatial effects of transport infrastructure: The role of market structure," Discussion Papers 5/98, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    • Handle: RePEc:zbw:tudiwv:598
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    1. Paul S. Armington, 1969. "A Theory of Demand for Products Distinguished by Place of Production (Une théorie de la demande de produits différenciés d'après leur origine) (Una teoría de la demanda de productos distinguiénd," IMF Staff Papers, Palgrave Macmillan, vol. 16(1), pages 159-178, March.
    2. Joaquim Oliveira Martins & Stefano Scarpetta & Dirk Pilat, 1996. "Mark-Up Ratios in Manufacturing Industries: Estimates for 14 OECD Countries," OECD Economics Department Working Papers 162, OECD Publishing.
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    Cited by:

    1. Röhl, Klaus-Heiner, 2000. "Der Aufbau der ostdeutschen Infrastruktur und sein Beitrag zur wirtschaftlichen Entwicklung in Sachsen," Discussion Papers 2/2000, Technische Universität Dresden, "Friedrich List" Faculty of Transport and Traffic Sciences, Institute of Transport and Economics.
    2. Eduardo Amaral Haddad & Fernando Salgueiro Perobelli, 2004. "Trade Liberalization And Regional Inequality: Do Transportation Costs Impose A Spatial Poverty Trap?," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32nd Brazilian Economics Meeting] 131, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].

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