Three essays on geography and trade

Abstract

Economic activity is unevenly distributed across physical space, influenced by the location, climate, and natural resources of a region. This dissertation contributes to the field of economic geography and quantitative spatial modeling through three essays that address key gaps in the literature. The first chapter examines the impact of local markets for non-tradable inputs on urban land prices. By using disaggregated spatial data and a two-stage estimation approach with market access as an instrumental variable, I find that districts with 1% more housing used by professional businesses have land prices that are 0.59% higher on average. This estimate increases to 1.24% when adjusted for potential endogeneity, and with robustness confirmed through alternative market access definitions. The second chapter estimates trade elasticity for Turkish exports at the product level. Utilizing detailed data on import tariffs and trade flows, I analyze the effects of tariff variations on trade flows. The median trade elasticity estimate is -4.48, with differences observed between homogeneous and differentiated goods, as well as between consumption, capital, and intermediate goods. The calculated Turkish welfare gains from trade are 19.8% using a homogeneous aggregate trade elasticity, increasing to 23.8% with heterogeneous trade elasticities in a multi-sector trade model. The third chapter investigates the effects of Turkey’s large infrastructure development program (2005-2015) on the size dispersion within local industries. Improved infrastructure, measured by travel time savings, decreases size dispersion by enhancing access to potential suppliers. This effect reduces trade costs and allows smaller firms to access cheaper inputs. No evidence of pro-competitive pressure affecting size dispersion was found. Overall, this dissertation advances our understanding of urban economic outcomes, international trade, and domestic trade by addressing significant gaps in economic geography and spatial modeling literature.