Preference Heterogeneity And Economic Geography
AbstractWe investigate the effect of preference heterogeneity between skilled and unskilled workers on agglomeration, and we identify a new source of dependence of equilibrium prices on the demand properties shaped by the inter-regional distribution of workers. We find a new preference effect, and we show that when the intensity of skilled workers' preference for the modern good and its variety is strong enough, prices charged by firms may even increase when the mass of local firms increases, therefore acting as a "new dispersion force" when trade costs are low or as a "new agglomeration force" when trade costs are high. Copyright (c) 2008, Wiley Periodicals, Inc.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal Journal of Regional Science.
Volume (Year): 49 (2009)
Issue (Month): 1 ()
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146
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- Raphael Auer, 2009. "Product Heterogeneity, Within-Industry Trade Patterns, and the Home Bias of Consumption?," Working Papers 09.05, Swiss National Bank, Study Center Gerzensee.
- Raphael A. Auer, 2013. "Product Heterogeneity, Cross-Country Taste Differences, and the Consumption Home Bias," Working Papers 13.01, Swiss National Bank, Study Center Gerzensee.
- Christian Ghiglino & Antonella Nocco, 2012.
"When Veblen meets Krugman,"
Economics Discussion Papers
708, University of Essex, Department of Economics.
- Christian Ghiglino, 2011. "When Veblen meets Krugman," 2011 Meeting Papers 768, Society for Economic Dynamics.
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