The Micromechanism Of The Impact Of Trade Cost On Internal Economic Geography

Global production is concentrated in big cities,developed provinces or rich countries.The 1.5% of the world's land area creates half of the world's production output.North America,the European Union and Japan have less than 1 billion people,but 75% of the world's wealth.Cairo,which accounts for 0.5% of Egypt's territory,has more than half of Egypt's GDP.The three southern states,which account for 15% of Brazil's total,contribute more than half of the country's total output.The area of 11 provinces in eastern China is 11.1% of China,but its total value added is more than 55 percent of China's GDP.The agglomeration of economic activity brings about economic growth,which also brings the huge gap between the core and the periphery.A country's opening to the outside world are an important force in reshapping domestic economic activity spatial structure,however,with the deepening of opening to the outside world,does the impact of trade cost on domestic spatial structure change with the state of industry competition? How to change? Begin with the market competition heterogeneity,on the basis of different market structures for industry,this paper aims to fully reveal the impact micromechanisms of cost of trading on domestic economic activity spatial structure.It can be the theory basis for the coordinated development of core and peripheral regional economy.The main contents and conclusions of this study are as follows:Firstly,the paper adopted the analysis paradigm of spatial economy,introducing the ?iceberg cost? in the perfect competition industry to reveal the influence of the trade cost on the domestic economy spatial structure.Research shows that:(1)when the trade costs between two domestic regions and foreign region are same,trade happen when one of the regions is large in the number of workers.With the equilibrium of trade,the core periphery structure is unstable and the symmetric equilibrium is stable.(2)in the case of foreign trade cost of domestic regions are same,foreign trade cost does not affect the spatial distribution of domestic workers or industries.(3)In the case of foreign trade costs of domestic regions are different,when domestic is an exporting country,opening to the outside world will lead to economic activities agglomeration in the border areas.When the country is an importing country,opening to the outside world will lead the economy to agglomeration in the inland regions.Secondly,in the industry of monopolistic competition,it analyzed the influence of the decline of transportation cost on the domestic spatial structure by dividing the trade cost into the transportation cost and transaction cost.Research shows that:(1)in the symmetrical case,with the decline of transportation costs,the domestic industry distribution tends to be more balanced.(2)In asymmetrical situations,asymmetric equilibrium is the stable and the economy is more concentrated in the border area.with the decrease of domestic transportation cost,the agglomeration degree has decreased.While with the decline of international transportation costs,the domestic economy is more concentrated in the area near the external market.(3)In the case of symmetry and asymmetry,the decline of domestic transportation costs is conducive to narrowing the gap of industry share between regions.Thirdly,in industries of oligopolistic competition,substitute the monopoly competition to oligopolistic competition,taking into account the strategic interaction between the enterprise,set up three regions C-P model,it analyzed the impact of opening to the outside world to domestic spatial equilibrium structure.The results show that:(1)in the industry of oligopoly competition,for regions with different amounts of workers,they engage in inter-industry trade.(2)In the case of foreign trade cost symmetry,as the total number of workers decreases,the profits of enterprises moving to the periphery area will gradually decrease,and the core peripheral structure will be more stable.Influence of domestic trade costs on profits of escaping enterprise is not monotonous,before turning point,the lower the cost of domestic trade,the higher the profit,after this point,the higher the trade cost,the higher the profits;The cost of international trade has no effect on the profit of the escaping enterprise.(3)In the case of asymmetric foreign trade costs,as the cost of international trade falls,trade liberalization will move the factors to the border areas,the core peripheral structure and symmetric structure are not stable equilibrium.Fourth,in industries of monopoly,in continuous liner space,it sets up theoretical model for a national monopoly firm who produce a single product and for a pure monopoly firm who produces of a variety of products,respectively,to analysis the influence of opening to the outside world on the location choice of domestic monopolist.Research results has shown that :(1)in the first model,there is a monopoly in the production of a single product in each country.When the market is open,the market becomes oligopoly.In the case of autarky,monopoly manufacturer chose the middle point of the domestic market for production,to minimize trade cost,but after opening to the outside world,the best location for small country is in the border area.(2)In the model of a monopolist produces a variety of horizontal differentiation products,monopolist not only can choose the output of goods,can also choose the types and location of production,to achieve maximum profits.Before opening to the outside world,the monopolist chooses the midpoint of the market to produce.After opening to the outside world,if international markets in both sides of the country are in the same size,the optimal location of the monopolists' production is still the midpoint of the domestic market.If the market size of both ends is different in size,then the location of the monopolist will deviate from the midpoint,closer to the end of the bigger foreign market.The micromechanism revealed by the theoretical model,it has the following policy implications:(1)in an open economy,periphery areas should select the suitable industrial system according to the market structure of the industry in the process of cultivating.(2)Opening to the outside world is one of the important factors for the reshapement of domestic economic geography.It is an important way for countries to actively build a new global open economy system to coordinate the development of domestic regions.In reality,space is often heterogeneous,so the pattern of opening to the outside world for different region is different.(3)It is necessary to actively and effectively reduce international trade costs and domestic interregional trade costs to achieve coordinated development of domestic regions.(4)The peripheral governments should adopt different measures to introduce industries according to the state of competition in the industry.(5)Industrial competition is endogenous.With the diversification of people's preferences,regional local governments can effectively promote market cultivation.