Portuguese Economic Journal

, Volume 8, Issue 1, pp 37–44 | Cite as

The core periphery model with asymmetric inter-regional and intra-regional trade costs

  • Vasco Leite
  • Sofia B. S. D. Castro
  • João Correia-da-Silva
Original Article

Abstract

We generalize the model of Krugman (J Polit Econ 99(3):483–499, 1991) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs).

Keywords

New Economic Geography Core-periphery Trade costs 

JEL Classifications

F12 F15 F21 R12 R13 

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Copyright information

© Springer-Verlag 2009

Authors and Affiliations

  • Vasco Leite
    • 1
  • Sofia B. S. D. Castro
    • 2
  • João Correia-da-Silva
    • 3
  1. 1.Faculdade de EconomiaUniversidade do PortoPortoPortugal
  2. 2.CMUP and Faculdade de EconomiaUniversidade do PortoPortoPortugal
  3. 3.CEMPRE and Faculdade de EconomiaUniversidade do PortoPortoPortugal

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