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

Author

Listed:
  • Kristian Behrens

    (CORE, Universit� Catholique de Louvain e LEG, Universit� de Bourgogne)

  • Andrea R. Lamorgese

    (Banca d'Italia and Ente Luigi Einaudi)

  • Gianmarco I.P. Ottaviano

    (Universit� di Bologna, FEEM e CEPR)

  • Takatoshi Tabuchi

    (Faculty of Economics, University of Tokyo)

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.

Suggested Citation

  • Kristian Behrens & Andrea R. Lamorgese & Gianmarco I.P. Ottaviano & Takatoshi Tabuchi, 2007. "Changes in transport and non transport costs: local vs. global impacts in a spatial network," Temi di discussione (Economic working papers) 628, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_628_07
    as

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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2007/2007-0628/en_tema_628.pdf
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    References listed on IDEAS

    as
    1. BEHRENS, Kristian & LAMORGESE, Andrea R. & OTTAVIANO, Gianmarco I.P. & TABUCHI, Takatoshi, 2005. "Testing the ‘home market effect’ in a multi-country world," LIDAM Discussion Papers CORE 2005055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    trade frictions; multi-country trade models; monopolistic competition; spatial networks; international integration;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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