Background: This paper discuss the effects of trade costs and comparative technology on industry location for the economy of China. Methods: The model assumes differences in comparative technology and different intraregional and interregional trade costs, and argues how different factors...

The paper asks whether subsidies aiming to redistribute economic activity across regions can be justified with the welfare argument. Moreover, different tax systems are compared with respect to the size of the subsidy needed for achieving a certain spatial distribution of economic activity, and...