The core periphery model with asymmetric inter-regional and intra-regional trade costs

Vasco Leite (), Sofia B.S.D. Castro () and Joao Correia-da-Silva
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Sofia B.S.D. Castro: CMUP and Faculdade de Economia, Universidade do Porto.

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: We generalize the model of Krugman (1991) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs).

Keywords: New Economic Geography; Core-Periphery; Trade costs; Unilateral protectionism. (search for similar items in EconPapers)
JEL-codes: F12 F15 F21 R12 R13 (search for similar items in EconPapers)
Pages: 44 pages.
Date: 2008-08
New Economics Papers: this item is included in nep-geo and nep-int
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: The core periphery model with asymmetric inter-regional and intra-regional trade costs (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:287

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