Two kinds of inequality are known in our society, natural or physical and ethical or political. The former is attributed to different skills and abilities and is considered acceptable, while the latter results from specific economic systems and is considered detrimental because it makes economies inefficient and unstable This naturally leads to a question, is the second inequality avoidable?

This paper focuses on spatial inequality, which appears not only between countries but also within them, exhibiting uneven economic development. Globalization is one of the reasons for spatial income inequalities (Anand and Segal, 2008). The heterogeneity of space (uneven distribution of technologies, natural resources, and amenities) results in such inequalities, whose linkage has been extensively explored by traditional trade theory. Meanwhile, by a model of New Trade Theory (NTT), a recent paper of Takahashi et al. (2013) shows that the income inequality between two countries always occur in the spatial equilibrium even when the countries are homogeneous and differ only in size. Moreover, such a spatial inequality initially rises and then falls when globalization deepens. Consequently, the inequality appears even when there are no relative advantages in technology, resource endowment, and geographic feature.

However, the analysis of Takahashi et al. (2013) is limited to the case of two countries. In a space of two countries, there is only one way the countries can interact. Moving away from one country automatically implies that firms go to the other country. Whereas in the case of more than two countries, there are many ways in which these countries can interact.1 So it is not clear how the two-country analysis extends. We need a multicountry model to incorporate complex feedback, which is also important for empirical studies.