Inter-Regional and International Trade: Seventy Years after Ohlin

40 Pages Posted: 14 Nov 2003

See all articles by Gianmarco I.P. Ottaviano

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Kristian Behrens

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE); Université de Bourgogne - LATEC

Carl Gaigne

French National Institute for Agricultural Research (INRA) - UMR 1302 SMART

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Date Written: September 2003

Abstract

We study the impact of falling trade costs and falling national transport costs on the economic geography of countries involved in an integration process. Two regions between which labour is mobile form each country, but there is no international factor mobility. Commodities can be traded both nationally and internationally at positive but different costs. In our setting, a decrease in trade costs and/or in national transport costs has direct impact on prices and wages in both countries. This allows us to study how the variations of these parameters affect the terms of trade and the levels of welfare, as well as to account for their impact on the economic geography of each country in a way that significantly differs from what has been accomplished so far.

Keywords: Economic geography, agglomeration, trade costs, transport costs

JEL Classification: F12, F16, R12

Suggested Citation

Ottaviano, Gianmarco I.P. and Behrens, Kristian and Gaigne, Carl and Thisse, Jacques-François, Inter-Regional and International Trade: Seventy Years after Ohlin (September 2003 ). CEPR Discussion Paper No. 4065 . Available at SSRN: https://ssrn.com/abstract=469162

Gianmarco I.P. Ottaviano (Contact Author)

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

Kristian Behrens

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

HOME PAGE: http://www.core.ucl.ac.be:16080/~behrens/

Université de Bourgogne - LATEC

Pôle d'Economie et de Gestion
21066 Dijon Cedex
France

Carl Gaigne

French National Institute for Agricultural Research (INRA) - UMR 1302 SMART ( email )

4 allée Adolphe Bobierre
CS 61103
Rennes Cedex, 35011
France

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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