Endogenous Transport Networks

Edouard Schaal and Pablo Fajgelbaum ()

No 1138, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: Abstract We develop a new theory of transport networks and study its implications for trade and growth. Given arbitrary demand and supply patterns, the model gives rise to endogenous bilateral trade costs. We first show how different spatial configurations of output and demand give rise to different types of networks. We determine conditions under which the ensuing network features spatial distributions of price gaps and employment that correspond to what is observed empirically.

Date: 2016
New Economics Papers: this item is included in nep-net, nep-reg, nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1138

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