Changes in Infrastructure and Tariff Barriers: Local vs. Global Impacts

34 Pages Posted: 8 Aug 2005

See all articles by Kristian Behrens

Kristian Behrens

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

Gianmarco I.P. Ottaviano

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

Andrea Roberto Lamorgese

Bank of Italy

Takatoshi Tabuchi

University of Tokyo - Faculty of Economics

Date Written: June 2005

Abstract

We develop a multi-country Dixit-Stiglitz model to investigate the impacts of: (i) changes in the international distribution of consumers' expenditure; (ii) decreasing tariffs; and (iii) improvements in transportation infrastructure. We show that, in general, decreasing tariff barriers do not allow for any clear predictions regarding changes in industry location and welfare, whereas this is possible with respect to improvements in transportation infrastructure. In particular, infrastructural improvements have spatially limited impacts when the transportation network is locally described by a tree. Any decrease in transport costs is Pareto welfare enhancing in this case.

Keywords: Multi-country trade models, imperfect competition, transportation networks, international integration, home market effect

JEL Classification: D58, F12, F17, R12

Suggested Citation

Behrens, Kristian and Ottaviano, Gianmarco I.P. and Lamorgese, Andrea Roberto and Tabuchi, Takatoshi, Changes in Infrastructure and Tariff Barriers: Local vs. Global Impacts (June 2005). CEPR Discussion Paper No. 5103, Available at SSRN: https://ssrn.com/abstract=779244

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

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

Andrea Roberto Lamorgese

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy
+39 06 4792 3441 (Phone)
+39 06 4792 2601 (Fax)

Takatoshi Tabuchi

University of Tokyo - Faculty of Economics ( email )

7-3-1 Hongo, Bunkyo-ku
Tokyo 113-0033
Japan
+81 3 5841 5603 (Phone)
+81 3 5841 5521 (Fax)

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