6533b853fe1ef96bd12add67

RESEARCH PRODUCT

How endogenous asymmetries in interregional market access trigger regional divergence

Kristian BehrensKristian Behrens

subject

Economics and EconometricsDivergence (linguistics)Economies of agglomerationbusiness.industryMarket accessDistribution (economics)Product differentiationInternational economicsTrade costUrban StudiesCompetition (economics)MicroeconomicsEconomicsbusiness

description

We investigate how asymmetric trade patterns in differentiated products affect the regional distribution of economic activities. The asymmetry in interregional market access is an endogenous result of price competition and industry location and arises for intermediate values of trade costs. We show that the emergence of one-way trade in differentiated products gives rise to strong agglomeration forces and leads to the absorption of the smaller region's industry by the larger region. The number of spatial equilibria increases once the pattern of trade is endogenously accounted for. (c) 2004 Elsevier B.V. All rights reserved.

yearjournalcountryeditionlanguage
2005-09-01Regional Science and Urban Economics
https://doi.org/10.1016/j.regsciurbeco.2004.06.002