A normative analysis of transport policies in a footloose capital model with interregional and intraregional transportation costs
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We introduce a distinction between interregional and intraregional transportation costs in a footloose capital model. This allows assessing more precisely the effects of different types of transport policies on the spatial distribution of activities. From a normative point of view, we find that, in the absence of regulation, the concentration of industrial activity is too high in the center. We show what set of interregional and intraregional transport policies improves the equilibrium.
JEL ClassificationR11 R12 R13 R42 R48 R58
Paul Chiambaretto would like to thank Thierry Mayer for his useful comments on the first draft of this paper. Jacques Thisse also provided useful comments on the topic treated here. We also benefited from the comments of Elijah DePalma. André De Palma and Stef Proost acknowledge the support of the French PREDIT research programme no 09 MT CV 14 and of the Sustaincity project (FP7- EU). The third author thanks also FWO Flanders.
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