A Tale of Two Ports: The Economic Geography of Inter‐City Rivalry*

Ngo Long and Kar‐yiu Wong

Review of International Economics, 2009, vol. 17, issue 2, 261-279

Abstract: This paper examines how two geographically separated ports compete for a market consisting of manufacturing firms located between them. There is a service firm in each port, and these two firms, taking the infrastructure provided by their governments as given, compete in prices. The governments compete in terms of investment in infrastructure. This paper shows that there are cases in which both the firm and the government in the port that has a longer history may have the first‐mover advantage. In particular, the government can provide a credible threat by overinvesting in infrastructure.

Date: 2009
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