Changes in Infrastructure and Tariff Barriers: Local Vs. Global Impacts

Gianmarco Ottaviano, Andrea Lamorgese, Takatoshi Tabuchi and Kristian Behrens

No 5103, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop a multi-country Dixit-Stiglitz model to investigate the impacts of: (i) changes in the international distribution of consumers' expenditure; (ii) decreasing tariffs; and (iii) improvements in transportation infrastructure. We show that, in general, decreasing tariff barriers do not allow for any clear predictions regarding changes in industry location and welfare, whereas this is possible with respect to improvements in transportation infrastructure. In particular, infrastructural improvements have spatially limited impacts when the transportation network is locally described by a tree. Any decrease in transport costs is Pareto welfare enhancing in this case.

Keywords: Multi-country trade models; Imperfect competition; Transportation networks; International integration; Home market effect (search for similar items in EconPapers)
JEL-codes: D58 F12 F17 R12 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-int, nep-net and nep-sea
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Citations: View citations in EconPapers (4)

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