Countries, Regions and Trade: on the Welfare Impacts of Economic Integration

Carl Gaigné, Kristian Behrens, Gianmarco I P Ottaviano, Jacques-François Thisse

Research output: Working paperDiscussion paper

Abstract

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. Commodities 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.
LanguageEnglish
Place of PublicationGlasgow
PublisherUniversity of Strathclyde
Pages1-27
Number of pages28
Volume05
Publication statusPublished - 23 Jan 2005

Fingerprint

Economic integration
Economic geography
Transport costs
Costs
Trade costs
Wages
Labor
Economic welfare
Policy coordination
Commodities
Integration process
Transport policy
International mobility
Trade barriers
International trade

Keywords

  • agglomeration
  • economic geography
  • regional integration
  • trade costs
  • transport costs

Cite this

Gaigné, C., Behrens, K., Ottaviano, G. I. P., & Thisse, J-F. (2005). Countries, Regions and Trade: on the Welfare Impacts of Economic Integration. (01 ed.) (pp. 1-27). Glasgow: University of Strathclyde.
Gaigné, Carl ; Behrens, Kristian ; Ottaviano, Gianmarco I P ; Thisse, Jacques-François. / Countries, Regions and Trade : on the Welfare Impacts of Economic Integration. 01. ed. Glasgow : University of Strathclyde, 2005. pp. 1-27
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Gaigné, C, Behrens, K, Ottaviano, GIP & Thisse, J-F 2005 'Countries, Regions and Trade: on the Welfare Impacts of Economic Integration' 01 edn, University of Strathclyde, Glasgow, pp. 1-27.

Countries, Regions and Trade : on the Welfare Impacts of Economic Integration. / Gaigné, Carl; Behrens, Kristian; Ottaviano, Gianmarco I P; Thisse, Jacques-François.

01. ed. Glasgow : University of Strathclyde, 2005. p. 1-27.

Research output: Working paperDiscussion paper

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N2 - 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. Commodities 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.

AB - 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. Commodities 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.

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Gaigné C, Behrens K, Ottaviano GIP, Thisse J-F. Countries, Regions and Trade: on the Welfare Impacts of Economic Integration. 01 ed. Glasgow: University of Strathclyde. 2005 Jan 23, p. 1-27.