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Do changes in transport costs and tariffs shape the space-economy in the same way?

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Behrens, Kristian [UCL]

We investigate how alternative ways of modelling trade costs affect the main results of "new" economic geography. In order to do so, we compare the impacts of falling transport costs and decreasing tariffs on the spatial distribution of economic activities. Our analysis reveals that tariffs and transport costs largely play symmetric roles, in the sense that a decrease in either of them favours agglomeration. Yet, tariffs generate rents which, once redistributed or used to finance local public goods, make dispersion sustainable over a larger range of parameter values. Therefore, decreasing transport costs are more likely to trigger agglomeration than decreasing tariffs.

Document type Article de périodique (Journal article)
Publication date 2006
Language Anglais
Journal information "Papers in Regional Science" - Vol. 85, no. 3, p. 379-399 (Août 2006)
Peer reviewed yes
Publisher Wiley-Blackwell Publishing, Inc. (Malden, USA)
issn 1056-8190
Publication status Publié
Affiliation UCL - EUEN/CORE - Center for operations research and econometrics
Keywords Transport costs ; Tariffs ; Agglomeration ; Economic geography
Links
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Bibliographic reference Behrens, Kristian. Do changes in transport costs and tariffs shape the space-economy in the same way?. In: Papers in Regional Science, Vol. 85, no. 3, p. 379-399 (Août 2006)
Permanent URL http://hdl.handle.net/2078.1/23583