Spatial price equilibrium and the transport sector: a trade-consistent SCGE model

Ando Asao and Bo Meng

No 447, IDE Discussion Papers from Institute of Developing Economies, Japan External Trade Organization(JETRO)

Abstract: This paper presents a framework for an SCGE model that is compatible with the Armington assumption and explicitly considers transport activities. In the model, the trade coefficient takes the form of a potential function,and the equilibrium market price becomes similar to the price index of varietal goods in the context of new economic geography (NEG). The features of the model are investigated by using the minimal setting, which comprises two non-transport sectors and three regions. Because transport costs are given exogenously to facilitate study of their impacts, commodity prices are also determined relative to them. The model can be described as a system of homogeneous equations, where an output in one region can arbitrarily be determined similarly as a price in the Walrasian equilibrium. The model closure is sensitive to formulation consistency so that homogeneity of the system would be lost by use of an alternative form of trade coefficients.

Keywords: Econometric model; Economic geography; Transportation; Trade theory; SCGE (Spatial Computable General Equilibrium) model; Armington assumption; Transport sector (search for similar items in EconPapers)
JEL-codes: C67 C68 R15 (search for similar items in EconPapers)
Date: 2014-02-01
New Economics Papers: this item is included in nep-cmp, nep-geo, nep-int and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published in IDE Discussion Paper = IDE Discussion Paper, No. 447. 2014-02-01

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https://ir.ide.go.jp/record/37728/files/IDP000447_001.pdf First version, 2014 (application/pdf)

Related works:
Journal Article: SPATIAL PRICE EQUILIBRIUM AND THE TRANSPORT SECTOR: A TRADE‐CONSISTENT SCGE MODEL (2019)
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