F12

Models of Trade with Imperfect Competition and Scale Economies

The analysis of borders effects in intra-African trade

The study aims to analyze the border effects on intra-African trade through the use of a gravity specification based on the monopolistic competition model of trade introduced by Krugman (1980). The study used CEPII data on trade flows between African countries over the period 1980-2006. We accommodate for the significant number of zero trade flows between several African countries by using the Heckman correction method.

Do rent-seeking and interregional transfers contribute to urban primacy in sub-Saharan Africa?

We develop an economic geography model where mobile skilled workers choose to either work in a production sector or to become part of an unproductive elite. The elite sets income tax rates to maximize its own welfare by extracting rents, thereby influencing the spatial structure of the economy and changing the available range of consumption goods. We show that either unskilled labor mobility, or rent-seeking behavior, or both, are likely to favor the occurence of agglomeration and of urban primacy.

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