Geography, Trade Patterns, and Economic Policy

Carlos Asilis and Luis Rivera-Batiz

No 1994/016, IMF Working Papers from International Monetary Fund

Abstract: This paper presents a geographical theory of location and interregional trade. Location is treated as an endogenous variable by firms, consumers and perfectly mobile workers in a two-sector economy. Space plays a central role owing to transportation costs, market access, and distance from polluting industrial centers. The model is used to examine: (1) aspects of a compensating-differential theory of regional unevenness, (2) the theoretical formulation of a gravity theory of trade patterns, (3) the geographic basis for industrial and environmental policy, and (4) the interaction between reductions in transportation costs, location patterns, and technological improvements.

Keywords: WP; increasing returns; cost of living; transportation cost; trade pattern; increasing returns to scale; resource allocation; cost reduction; Transportation; Manufacturing; Agricultural sector; Wages; Eastern Europe; North America; Asia and Pacific; Global (search for similar items in EconPapers)
Pages: 44
Date: 1994-02-01
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Citations: View citations in EconPapers (8)

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