Behrens, Kristian; Gaigné, Carl; Ottaviano, Gianmarco I.P. - Département Sciences Sociales, Agriculture et … - 2006
We present a two-country four-region model of new economic geography that partly endogenizes the level of trade costs. Contrary to the existing literature, we assume that international unit shipping costs depend on the volume of trade, due to the presence of density (dis)economies. We show that...