We develop a model that investigates how strategically interacting firms share a given set of spatially separated markets. We show that, for intermediate val-ues of transport costs, the spatial distribution of firms determines the structure of interregional trade, which in return influences this...

We compare the impact of falling transport costs, borne by firms, and decreasing tariffs, borne by either firms or consumers, on the regional distribution of economic activities. Our main result shows that tariffs and tranport costs play symmetric roles in that a decrease in either of them...

We develop a spatial general equilibrium model in which the absence of trade is an endogenous outcome and we show that trade is not a necessary condition for agglomeration to arise. More precisely, extending the model developed by Ottaviano et al. [13], we show that equilibria without trade...

We extend the quadratic utility approach by Ottaviano et al. [19] and by Behrens [1] to the range of intermediate values of transport costs in or- der to investigate how asymmetric trade affects the regional distribution of economic activities. Asymmetry in trade is an endogenous result of price...

Trade liberalization and trade policy obviously affect the internal distribution of economic activities within a liberalizing country. We show that the impact of decreasing international trade costs on the regional distribution of economic activities crucially depends on the value of transport...

We propose a quantity-based "dual" version of the gravity equation that yields an estimating equation with both cross-sectional interdependence and spatially lagged error terms. Such an equation can be concisely estimated using spatial econometric techniques. We illustrate this methodology by...