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TRANSPORTATION COSTS IN REGIONAI, MODELS OF FOREIGN TRADE: AN APPLICATION TO CANADA‐U.S. TRADE *
Author(s) -
Wide Randall M.
Publication year - 1992
Publication title -
journal of regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.171
H-Index - 79
eISSN - 1467-9787
pISSN - 0022-4146
DOI - 10.1111/j.1467-9787.1992.tb00178.x
Subject(s) - computable general equilibrium , economics , welfare , tariff , production (economics) , point (geometry) , trade barrier , international trade , international economics , econometrics , microeconomics , mathematics , geometry , market economy
. This paper outlines some arguments about the role of transportation costs in determining the welfare consequences of trade restrictions. The analysis uses a computable general equilibrium (CGE) model and presents the relevant features for trade analysis. The model has two alternative spatial formulations. In the first, all production and trade occur at one point, while in the second the regions are separated by distance. The calculated effects of a unilateral tariff increase are compared using the CGE model with the “point” and “distance” formulation. While the presence of transportation costs is crucial to some sectoral trade and production results, most welfare results are relatively insensitive to the spatial structure of the model.