Changes in transport and non-transport costs: Local vs global impacts in a spatial network

Behrens, Kristian; Lamorgese, Andrea; Ottaviano, Gianmarco I.P.; Tabuchi, Takatoshi

doi:10.1016/j.regsciurbeco.2007.08.003

Cited by 165 publications

(37 citation statements)

References 16 publications

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“…We call the first spatial or distance-dependent trade costs, and the second non-spatial or distance-independent. As shown by Melchior (2000), see also Behrens et al (2007); when the two types are present simultaneously one obtains qualitatively new effects on the spatial distribution of activity or incomes that are not present when each is considered in isolation. In the model simulations, trade costs always include a spatial as well as a non-spatial component.…”

Section: E3mentioning

confidence: 83%

East-West Integration and the Economic Geography of Europe

Melchior

2009

SSRN Journal

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[Abstract] Implementation of the European internal market and East-West integration has been accompanied by a dramatic change in the spatial distribution of economic activity, with higher growth west and east of a longitude degree through Germany and Italy. In the east, income growth has been accompanied by increasing regional disparities within countries. We examine theoretically and empirically whether European integration as such can explain these developments. Using a numerical simulation model with 9 countries and 90 regions, theoretical predictions are derived about how various patterns of integration may affect the income distribution. Comparing with reality, we find that a reduction in distance-related trade costs combined with east-west integration is best able to explain the actual changes in Europe's economic geography. This suggests that the implementation of the European internal market or the Euro has "made Europe smaller". In Central Europe, the dominance of capital regions tends to eliminate east-west growth differences inside countries. There is no convincing support for the hypothesis that European integration had adverse effects on non-members.

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Section: E3mentioning

confidence: 83%

East-West Integration and the Economic Geography of Europe

Melchior

2009

SSRN Journal

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“…This is where our work departs from the modern "non-spatial"paradigm of modeling imperfect competition in international trade (Ottaviano et al, 2002;Melitz, 2003;Melitz and Ottaviano, 2008;Dhingra, 2013;Mayer et al, 2014), where the substitution term is the same across varieties and where heterogeneities are mostly on the supply side. 9 The relationship of our work to this strand of literature is best described as follows. Recent studies of monopolistic competition under variable elasticity of substitution (Behrens and Murata, 2007;Zhelobodko et al, 2012;Parenti et al, 2014) go in the direction of dealing with more and more general classes of symmetric consumers' utilities, remaining within the non-spatial paradigm.…”

Section: Related Literaturementioning

confidence: 99%

Price Competition in Product Variety Networks

Ushchev¹,

Zénou

2016

SSRN Journal

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We develop a product-differentiated model where the product space is a network defined as a set of varieties (nodes) linked by their degrees of substituability (edges). We also locate consumers into this network, so that the location of each consumer (node) corresponds to her "ideal" variety. We show that, even though prices need not to be strategic complements, there exists a unique Nash equilibrium in the price game among firms. Equilibrium prices are determined by both firms' sign-alternating Bonacich centralities and the average willingness to pay across consumers. They both hinge on the network structure of the firm-product space. We also investigate how local product differentiation and the spatial discount factor affect the equilibrium prices. We show that these effects non-trivially depend on the network structure. In particular, we find that, in a star-shaped network, the firm located in the star node does not always enjoy higher monopoly power than the peripheral firms.

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“…The preferences of a typical resident of country i are 4 When there is no freely traded outside good, factor prices react to changes in specialization, which requires analyzing the so-called 'wage equations'. These are transcendental and cannot be solved analytically (see, e.g., Fujita et al, 1999, p.55).…”

Section: An Extended Helpman-krugman Modelmentioning

confidence: 99%

“…Unfortunately, the analyses of Laussel and Paul (2007) and Crozet and Trionfetti (2008), again in the two-country case, suggest that general analytical results cannot be derived for an arbitrary number of countries. 4 represented by the following utility function:…”

Section: An Extended Helpman-krugman Modelmentioning

confidence: 99%

“…Second, following Deardorff (1984) and Trefler (1995), we allow for the violation of FPE by introducing Ricardian differences in technology that generate international wage differences that are invariant to international sectoral specialization. 4 The remainder of the paper is divided into four sections. Section 2 extends the model by Helpman and Krugman (1985) to a set-up with an arbitrary number of countries and Ricardian differences in technology.…”

Section: Introductionmentioning

confidence: 99%

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Beyond the Home Market Effect: Market Size and Specialization in a Multi-Country World

et al. 2010

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SummaryThe standard two-country model of international trade with monopolistic competition predicts a more-than-proportional relationship between a country's share of world production of a good and its share of world demand for that same good, a result known as the "home market effect". We first show that this prediction does not generally carry through to the multi-country case, as production patterns are crucially affected by third country effects. We then derive an alternative prediction that holds whatever the number of countries considered. This new prediction takes into account important features of the real world such as comparative advantage due to cross-country technological differences and lack of factor price equalization. This article is a shorter revised version of the paper previously circulated under the title "Testing the 'home market effect' in a multi-country world". We thank two anonymous referees, the editor D. Trefler, as well as A. Anas, M. Brülhart, M. Bugamelli, D. Davis, G. Duranton, C. Ertur, L. Goldberg, G. Grossman, K. Head, E. Helpman, W. Koch, T. Mayer, P. Monfort, C. Michelot, S. Redding, Y. Sato, F. Schivardi, J. Südekum, F. Trionfetti, D. Weinstein, Y. Zenou, seminar AbstractThe standard two-country model of international trade with monopolistic competition predicts a more-than-proportional relationship between a country's share of world production of a good and its share of world demand for that same good, a result known as the 'home market effect'. We first show that this prediction does not generally carry through to the multi-country case, as production patterns are crucially affected by third country effects. We then derive an alternative prediction that holds whatever the number of countries considered. This new prediction takes into account important features of the real world such as comparative advantage due to cross-country technological differences and lack of factor price equalization.

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Changes in transport and non-transport costs: Local vs global impacts in a spatial network

Cited by 165 publications

References 16 publications

East-West Integration and the Economic Geography of Europe

East-West Integration and the Economic Geography of Europe

Price Competition in Product Variety Networks

Beyond the Home Market Effect: Market Size and Specialization in a Multi-Country World

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