1. Countries, regions and trade: On the welfare impacts of economic integration
- Author
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Kristian Behrens, Carl Gaigné, Gianmarco I.P. Ottaviano, Jacques-François Thisse, Center of Operation Research and Econometrics [Louvain] (CORE), Université Catholique de Louvain (UCL), Unité de recherche d'Économie et Sociologie Rurales (ESR), Institut National de la Recherche Agronomique (INRA), Università di Bologna [Bologna] (UNIBO), Fondazione Eni Enrico Mattei (FEEM), Fondazione Eni Enrico Mattei, Center for Economic Policy Research (CEPR), CEPR, Paris-Jourdan Sciences Economiques (PJSE), Centre National de la Recherche Scientifique (CNRS)-École des Ponts ParisTech (ENPC)-École des hautes études en sciences sociales (EHESS)-École normale supérieure - Paris (ENS Paris), Paris School of Economics (PSE), Behrens K., Gaigné C., Ottaviano G.I.P., Thisse J.-F., Université Catholique de Louvain = Catholic University of Louvain (UCL), Alma Mater Studiorum Università di Bologna [Bologna] (UNIBO), École normale supérieure - Paris (ENS Paris), Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-École des hautes études en sciences sociales (EHESS)-École des Ponts ParisTech (ENPC)-Centre National de la Recherche Scientifique (CNRS), École des Ponts ParisTech (ENPC)-École normale supérieure - Paris (ENS Paris), and Université Paris sciences et lettres (PSL)-Université Paris sciences et lettres (PSL)-Université Paris 1 Panthéon-Sorbonne (UP1)-Centre National de la Recherche Scientifique (CNRS)-École des hautes études en sciences sociales (EHESS)-Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement (INRAE)
- Subjects
Economic integration ,Economics and Econometrics ,AGGLOMERATION ,Process (engineering) ,media_common.quotation_subject ,TRADE COST ,0211 other engineering and technologies ,Agglomeration ,Economic geography ,Regional integration ,Trade costs ,Transport costs ,02 engineering and technology ,TRANSPORT COST ,Trade cost ,Economies et finances ,JEL: F - International Economics/F.F1 - Trade/F.F1.F16 - Trade and Labor Market Interactions ,0502 economics and business ,ECONOMIC GEOGRAPHY ,Economics ,REGIONAL INTEGRATION ,050207 economics ,JEL: F - International Economics/F.F1 - Trade/F.F1.F12 - Models of Trade with Imperfect Competition and Scale Economies • Fragmentation ,Trade barrier ,media_common ,International mobility ,Economies of agglomeration ,05 social sciences ,021107 urban & regional planning ,International economics ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,JEL: R - Urban, Rural, Regional, Real Estate, and Transportation Economics/R.R1 - General Regional Economics/R.R1.R12 - Size and Spatial Distributions of Regional Economic Activity ,Economies and finances ,8. Economic growth ,Welfare ,Finance ,AGGLOMERATION, ECONOMIC GEOGRAPHY, REGIONAL INTEGRATION, TRADE COST, TRANSPORT COST - Abstract
CB 009613 JEL F12; F16; R12; We study the impact of falling international trade costs and falling national transport costs on the economic geography of countries involved in an integration process. Each country is formed by two regions between which labor is mobile, whereas there is no international mobility. Goods can be traded both nationally and internationally at positive, but different, costs. A decrease in trade costs and/or in transport costs has a direct impact on prices and wages in both countries. This allows us to account for the impact of changes in these parameters on the economic geography and welfare of each country. We show that, as trade barriers fall, the benefits of integration come after its costs. We also show that national transport policies are of the beggar-thy-neighbour type. On both counts, policy coordination is required in the process of economic integration.
- Published
- 2007
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