A Spatial Theory of Trade | Zendy

Esteban RossiHansberg | Zendy

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A Spatial Theory of Trade

Author(s) -

Esteban RossiHansberg

Publication year - 2005

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/000282805775014371

Subject(s) - externality , economics , economies of agglomeration , gravity model of trade , economic integration , general equilibrium theory , gravity equation , economic geography , distribution (mathematics) , trade barrier , international trade , bilateral trade , international economics , microeconomics , geography , mathematical analysis , mathematics , archaeology , china

The equilibrium relationship between trade and the spatial distribution of economic activity is fundamental to the analysis of national and regional trade patterns, as well as to the effect of trade frictions. We study this relationship using a trade model with a continuum of regions, transport costs, and agglomeration effects caused by production externalities. We analyze the equilibrium specialization and trade patterns for different levels of transport costs and externality parameters. Understanding trade via the distribution of economic activity in space naturally rationalizes the evidence on border effects and the "gravity equation."

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