Transport Costs and North-South Trade
نویسندگان
چکیده
We develop a simple two country model of international trade that assumes that there is a fixed cost associated with transporting goods across national boundaries. We show that this leads to multiple equilibria that can be Pareto-ranked. One of these equilibria is autarky. We argue that the existence of fixed costs in transport can help explain the low volume of North-South trade. ∗GREQAM, University of Aix-Marseille II, email: [email protected] †Department of Economics, University of Iowa, email: [email protected]
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