(The University of Chicago, Booth School of Business)
When trade is costly within countries, international trade leads to concentration of economic activity in locations with good access to foreign markets. Costly trade within countries also makes it harder for remote locations to gain from international trade. We investigate the role of these forces in shaping industry location, employment concentration and the gains from international trade. We develop a model that features Ricardian comparative advantages between countries, coupled with di§erences in proximity to international markets across locations within a country. In the model, international trade creates a partition between a coastal and an interior region that di§er in population density and specialization patterns. We assess the model prediction for industry location across U.S. counties. In tune with the theory, we Önd that U.S. export-oriented industries are more likely to locate and to employ more workers closer to international ports. We use the model to measure the importance of international trade in concentrating economic activity, and of domestic trade costs in hampering the gains from international trade.
P.S: The seminar will be held in English.