Inter-regional and International Trade: Seventy Years After Ohlin

Kristian Behrens (), Carl Gaigne, Gianmarco I.P. Ottaviano () and Jacques Thisse ()

No 4065, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We study the impact of falling trade costs and falling national transport costs on the economic geography of countries involved in an integration process. Two regions between which labour is mobile form each country, but there is no international factor mobility. Commodities can be traded both nationally and internationally at positive but different costs. In our setting, a decrease in trade costs and/or in national transport costs has direct impact on prices and wages in both countries. This allows us to study how the variations of these parameters affect the terms of trade and the levels of welfare, as well as to account for their impact on the economic geography of each country in a way that significantly differs from what has been accomplished so far.

Keywords: agglomeration; economic geography; trade costs; transport costs (search for similar items in EconPapers)
JEL-codes: F12 F16 R12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo
Date: 2003-09
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