Interregional Trade, Industrial Location and Import Infrastructure

Kikuchi, Toru and Iwasa, Kazumichi (2009): Interregional Trade, Industrial Location and Import Infrastructure.

Abstract

The purpose of this study is to illustrate, with a simple two-region, two-good, two-factor model, how an improvement in one region’s import infrastructure can affect firms’ location decisions and the nature of the trading equilibrium. It is shown that, through improvements in import infrastructure, one region might divert high-tech industries to another region. This effect reduces the incentive to improve import infrastructure.

• Item Type: MPRA Paper
• Language: English
• Keywords: Interregional Trade; Import Infrastructure
• Subjects: F - International Economics > F1 - Trade > F12 - Models of Trade with Imperfect Competition and Scale Economies ; Fragmentation

References

Behrens, K., Gaigne, C., Ottaviano, G.I.P., and J.-F. Thisse (2007) “Countries, Regions and Trade: On the Welfare Impacts of Economic Integration,” European Economic Review, Vol. 51, pp. 1277–1301.

Costa-Font, J., and E. Rodriguez-Oreggia (2005) “Trade and the Effect of Public Investment on Regional Inequalities in Heterogeneously Integrated Areas,” World Economy, Vol. 28, pp. 873–891.

Dixit, A. K., and J. Stiglitz (1977) “Monopolistic Competition and Optimum Product Diversity,” American Economic Review, Vol. 67, pp. 297–308.

Fujita, M., P. Krugman and A. J. Venables (1999) The Spatial Economy: Cities, Regions and International Trade, Cambridge, Mass.: MIT Press.

Limao, N., and A. J. Venables (2001) “Infrastructure, Geographical Disadvantage, Transport Costs, and Trade,” World Bank Economic Review, Vol. 15, pp. 451–479.

Kikuchi, T. (2005) “Interconnected Communications Networks and Home Market Effects,” Canadian Journal of Economics, Vol. 38, pp. 870–882.