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Journal of Economic Geography Advance Access published online on April 24, 2006
Journal of Economic Geography, doi:10.1093/jeg/lbi024
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© The Author (2006). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org
Received March 25, 2005
Accepted December 27, 2005

Article

Is remoteness a locational disadvantage?

Kristian Behrens 1, Carl Gaigné 2, Gianmarco I. P. Ottaviano 3, and Jacques-François Thisse 4 *

1 CORE, Université catholique de Louvain, Belgium
2 INRA-ESR, Rennes, France
3 Università di Bologna, Italy; FEEM and CEPR, London
4 CORE Université catholique de Louvain, Belgium; PSE, France; CEPR, London

* To whom correspondence should be addressed.
Jacques-François Thisse, E-mail: thisse{at}core.ucl.ac.be


  Abstract

We study the impacts of changes in international trade and domestic transport costs on the internal geography of countries in the presence of geographical asymmetries. To do so, we develop a two-country four-region model in which one country has a region that exhibits a ‘geographical advantage’ in terms of better access to the other country's markets. Our analysis reveals that, in equilibrium, the space-economies of the trading partners are interdependent and that agglomeration in one country reduces the occurrence of agglomeration in the other, thus showing that physical geography suffices to build strong connections between the two space-economies. We also show that remoteness need not be a geographical disadvantage since a landlocked region may well be the location that attracts the larger share of firms. This is so when internal transport costs are high and, therefore, act as a barrier to competition from abroad.

Keywords: agglomeration; economic geography; international trade; trade and transport costs; locational advantage.
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