Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
983928 | Regional Science and Urban Economics | 2008 | 9 Pages |
Abstract
A simple two-country model of economic geography is constructed in order to examine the effect of tariff competition on the spatial distribution of manufacturing activities as well as on welfare. We show that when the transport cost is small, tariff competition with firm migration leads to a core-periphery economy, where one of the two countries imposes no tariff in Nash equilibrium. We also show that when the transport cost is sufficiently large, both countries impose a positive tariff, which decreases the welfare of both countries.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Chao-Cheng Mai, Shin-Kun Peng, Takatoshi Tabuchi,