Trade liberalisation and agglomeration with firm heterogeneity: Forward and backward linkages

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

This paper studies the impact of trade cost reductions on the geographical concentration of manufacturing in the presence of intermediate input linkages, firm heterogeneity and fixed export costs. The presence of non-exporting firms in this Melitz-like model hampers full agglomeration by weakening the forward and backward linkages and fortifying market-crowding effect. Gradual trade liberalisation causes gradual agglomeration rather than the catastrophic agglomeration that economic geography models have long suggested. Also, trade liberalisation produces divergent welfare effects with the periphery losing and the core gaining; even costless trade fails to equalise welfare in the core and periphery due to non-exported intermediate inputs.

Original languageEnglish
Pages (from-to)530-541
Number of pages12
JournalRegional Science and Urban Economics
Volume39
Issue number5
DOIs
Publication statusPublished - 2009 Sep
Externally publishedYes

Fingerprint

trade liberalization
agglomeration
liberalization
agglomeration area
firm
welfare
cost reduction
economic geography
manufacturing
market
cause
costs
cost
Agglomeration
Firm heterogeneity
Trade liberalization
Backward linkages
effect
Intermediate inputs

Keywords

  • Economic geography
  • Gradual agglomeration
  • Heterogeneous firms

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies

Cite this

Trade liberalisation and agglomeration with firm heterogeneity : Forward and backward linkages. / Okubo, Toshihiro.

In: Regional Science and Urban Economics, Vol. 39, No. 5, 09.2009, p. 530-541.

Research output: Contribution to journalArticle

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