Is Remoteness a Locational Disadvantage?

Posted: 29 Feb 2008

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

Jacques-François Thisse

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

Carl Gaigne

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

Date Written: June 2006

Abstract

We study the impacts of changes in international trade and domestic transport costs on the internal geography of countries in the presence of geographical asymmetries. To do so, we develop a two-country four-region model in which one country has a region that exhibits a 'geographical advantage' in terms of better access to the other country's markets. Our analysis reveals that, in equilibrium, the space-economies of the trading partners are interdependent and that agglomeration in one country reduces the occurrence of agglomeration in the other, thus showing that physical geography suffices to build strong connections between the two space-economies. We also show that remoteness need not be a geographical disadvantage since a landlocked region may well be the location that attracts the larger share of firms. This is so when internal transport costs are high and, therefore, act as a barrier to competition from abroad.

Keywords: JEL classifications: F12, F16, R12

Suggested Citation

Ottaviano, Gianmarco I.P. and Behrens, Kristian and Thisse, Jacques-François and Gaigne, Carl, Is Remoteness a Locational Disadvantage? (June 2006). Journal of Economic Geography, Vol. 6, Issue 3, pp. 347-368, 2006. Available at SSRN: https://ssrn.com/abstract=917731 or http://dx.doi.org/10.1093/jeg/lbi024

Gianmarco I.P. Ottaviano

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

Via Gobbi 5
Milan, 20136
Italy

Kristian Behrens (Contact Author)

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

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

Carl Gaigne

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

4 allée Adolphe Bobierre
CS 61103
Rennes Cedex, 35011
France

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