Changes in transport and non transport costs: local vs. global impacts in a spatial network

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

No 628, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

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)
JEL-codes: D58 F12 F17 R12 (search for similar items in EconPapers)
Date: 2007-04
References: Add references at CitEc
Citations: View citations in EconPapers (38)

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Related works:
Journal Article: 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:bdi:wptemi:td_628_07

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