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 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...