On the development strategy of countries of intermediate size - An analysis of heterogenous firms in a multiregion framework

Rikard Forslid and Toshihiro Okubo

No 8178, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper compares two policies: trade cost reduction and firm relocation cost reduction using a three-country version of a heterogeneous-firms economic geography model, where the three countries have different market (population) size. We show how the effects of the two policies differ, in particular, for the country of intermediate size. Unless the intermediate country is very small, it will gain industry when relocation costs are reduced, but lose industry when trade costs are reduced. The smallest country loses industry in both cases, but only experiences lower welfare in the case of lower relocation costs. Thus, the ranking of the policies from the point of view of the two small and intermediate countries tends to be the opposite.

Keywords: Agglomeration; Firm heterogeneity; Multi-country model; Relocation costs; Trade liberalisation (search for similar items in EconPapers)
JEL-codes: F12 F15 F21 R12 (search for similar items in EconPapers)
Date: 2011-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://cepr.org/publications/DP8178 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: On the development strategy of countries of intermediate size—An analysis of heterogeneous firms in a multi-region framework (2012)
Working Paper: On the development strategy of countries of intermediate size - An analysis of heterogeneous firms in a multi-region framework (2011)
Working Paper: On the Development Strategy of Countries of Intermediate size - An Analysis of Heterogenous Fims in a Multiregion Framework (2010)
Working Paper: On the development strategy of countries of intermediate size -An analysis of heterogenous firms in a multiregion framework (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:8178

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP8178

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().