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Spatial discrimination, nations' size and transportation costs

  • In this paper we develop a spatial Cournot trade model with two unequally sized countries, using the geographical interpretation of the Hotelling line. We analyze the trade and welfare effects of international trade between these two countries. The welfare analysis indicates that in this framework the large country benefits from free trade and the small country may be hurt by opening to trade. This finding is contrary to the results of Shachmurove and Spiegel (1995) as well as Tharakan and Thisse (2002), who use related models to analyze size effects in international trade, where the small country usually gains from trade and the large country may lose.

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Author:Kai Andree
Series (Serial Number):Volkswirtschaftliche Diskussionsbeiträge (101)
Document Type:Working Paper
Year of Completion:2010
Publishing Institution:Universität Potsdam
Release Date:2010/09/27
Tag:Außenwirtschaftstheorie; Landesgröße; Neue ökonomische Geographie; Räumlicher Wettbewerb; Transportkosten; Zwei-Länder-Modell
RVK - Regensburg Classification:QD 100
Organizational units:Wirtschafts- und Sozialwissenschaftliche Fakultät / Wirtschaftswissenschaften
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoKeine Nutzungslizenz vergeben - es gilt das deutsche Urheberrecht