Changes in transport and non-transport costs: Local vs global impacts in a spatial network

Kristian Behrens (), Andrea Lamorgese, Gianmarco Ottaviano and Takatoshi Tabuchi

Regional Science and Urban Economics, 2007, vol. 37, issue 6, 625-648

Abstract: We develop a multi-country Dixit-Stiglitz trade model and analyze how industry location and welfare respond to changes in: (i) transport frictions (e.g., infrastructure, transportation technology); and (ii) non-transport frictions (e.g., tariffs, standards and regulations). We show that changes in non-transport frictions, which are usually origin-destination specific, do not allow for any clear prediction as to changes in industry location and welfare; whereas changes in transport frictions, which are usually not origin-destination specific, may allow for such predictions. In particular, we show that reductions in transport frictions occurring at links around which the spatial network is locally a tree are Pareto welfare improving.

Keywords: Trade; frictions; Multi-country; trade; models; Monopolistic; competition; Spatial; networks; International; integration (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (40)

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Working Paper: Changes in transport and non transport costs: local vs. global impacts in a spatial network (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:37:y:2007:i:6:p:625-648

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