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A model of economic geography with demand-pull and congestion costs

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  • Olga Alonso-Villar

Abstract

This article proposes a simple model of economic geography by which to derive analytical results when jointly considering two centrifugal forces - congestion costs together with the pull demand effect - within the Dixit-Stiglitz-Iceberg framework. In this vein, we develop a unified model with labour mobility that combines some of the features of Tabuchi (1998) with those of Forslid and Ottaviano (2003). We analytically show that when considering the effects of congestion costs, the dispersion of economic activity is possible not only at high, but also at low transport costs. This result corroborates previous numerical simulations conducted by Tabuchi (1998). Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.

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File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1435-5957.2007.00160.x
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Bibliographic Info

Article provided by Wiley Blackwell in its journal Papers in Regional Science.

Volume (Year): 87 (2008)
Issue (Month): 2 (06)
Pages: 261-276

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Handle: RePEc:bla:presci:v:87:y:2008:i:2:p:261-276

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190

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  1. Picard, Pierre M. & Zeng, Dao-Zhi, 2005. "Agricultural sector and industrial agglomeration," Journal of Development Economics, Elsevier, vol. 77(1), pages 75-106, June.
  2. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-Francois Tissse, 1999. "Agglomeration and Trade Revisited," CIRJE F-Series CIRJE-F-65, CIRJE, Faculty of Economics, University of Tokyo.
  3. Forslid, Rikard & Haaland, Jan I. & Midelfart Knarvik, Karen Helene, 2002. "A U-shaped Europe?: A simulation study of industrial location," Journal of International Economics, Elsevier, vol. 57(2), pages 273-297, August.
  4. Puga, Diego, 1997. "The Rise and Fall of Regional Inequalities," CEPR Discussion Papers 1575, C.E.P.R. Discussion Papers.
  5. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
  6. Edward L. Glaeser & Janet E. Kohlhase, 2003. "Cities, Regions and the Decline of Transport Costs," Harvard Institute of Economic Research Working Papers 2014, Harvard - Institute of Economic Research.
  7. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
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Cited by:
  1. Akamatsu, Takashi & Takayama, Yuki, 2009. "A Simplified Approach to Analyzing Multi-regional Core-Periphery Models," MPRA Paper 21739, University Library of Munich, Germany, revised 29 Oct 2009.
  2. Fabien CANDAU, 2009. "Is Agglomeration Desirable ?," Working Papers 3, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Oct 2009.
  3. Schaeffer, Y. & Charlot, S., 2012. "Inequality aversion, income redistribution and economic geography," Working Papers 201204, Grenoble Applied Economics Laboratory (GAEL).
  4. Marian Rizov, 2011. "Is there a limit to agglomeration? Evidence from productivity of Dutch firms," ERSA conference papers ersa11p231, European Regional Science Association.

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