DP5103 Changes in Infrastructure and Tariff Barriers: Local Vs. Global Impacts
|Author(s):||Kristian Behrens, Andrea Lamorgese, Gianmarco Ottaviano, Takatoshi Tabuchi|
|Publication Date:||June 2005|
|Keyword(s):||home market effect, imperfect competition, international integration, multi-country trade models, transportation networks|
|JEL(s):||D58, F12, F17, R12|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=5103|
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.