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Self-Defeating Regional Concentration

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  • Matsuyama, Kiminori
  • Takahashi, Takaaki

Abstract

Most policy debates on regional policies implicitly assume that there is too much concentration. In our two-region economy model of migration, desirable concentration fails to occur under some conditions, and undesirable concentration occurs in others. In the latter case, even though the individuals collectively prefer to be distributed evenly across the two regions, they end up concentrating into one region in their pursuit of better life. Hence, the freedom to move can be self-defeating. The authors characterize the conditions for such self-defeating concentration. The coordination failures between the entry decision of service firms and the migration decision of individuals are caused by the incompleteness of markets due to the endogeneity of the range of services available, which deprive the agents of the opportunity to signal demand and supply for potential services. The argument does not rely on price distortions, the nonconvexities implied by increasing returns and nontradedness, congestion externalities) nor myopia in migration decisions. Copyright 1998 by The Review of Economic Studies Limited.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Review of Economic Studies.

Volume (Year): 65 (1998)
Issue (Month): 2 (April)
Pages: 211-34

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Handle: RePEc:bla:restud:v:65:y:1998:i:2:p:211-34

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  11. Matsuyama, Kiminori, 1992. "The market size, entrepreneurship, and the big push," Journal of the Japanese and International Economies, Elsevier, vol. 6(4), pages 347-364, December.
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Cited by:
  1. Döring, Thomas, 2005. "Räumliche Externalitäten von Wissen und ihre Konsequenzen für die Ausgestaltung des Finanzausgleichs," Forschungs- und Sitzungsberichte der ARL: Aufsätze, in: Das föderative System in Deutschland: Bestandsaufnahme, Reformbedarf und Handlungsempfehlungen aus raumwissenschaftlicher Sicht, pages 93-120 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
  2. Nicholas Sheard, 2012. "Regional policy in a multiregional setting: when the poorest are hurt by subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 148(2), pages 403-423, June.
  3. Yannis M. Ioannides & George Petrakos, 2000. "Regional Disparities in Greece and the Performance of Crete, Peloponnese and Thessaly," Discussion Papers Series, Department of Economics, Tufts University 0008, Department of Economics, Tufts University.
  4. Döring, Thomas & Schnellenbach, Jan, 2004. "What Do We Know About Geographical Knowledge Spillovers and Regional Growth? A Survey of the Literature," Research Notes 14, Deutsche Bank Research.
  5. Haaparanta, Pertti, 1998. "Regional concentration, trade, and welfare," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 445-463, July.
  6. Thomas Brenner & Niels Weigelt, 2001. "The Evolution Of Industrial Clusters — Simulating Spatial Dynamics," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 4(01), pages 127-147.
  7. Dietmar Harhoff, 1999. "Firm Formation And Regional Spillovers - Evidence From Germany," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 27-55.
  8. Philippe Martin, 2000. "The Role of Public Policy in the Process of Regional Convergence," Sciences Po publications info:hdl:2441/9328, Sciences Po.
  9. Kristian Behrens & Carl Gaigné & Jacques-François Thisse, 2009. "Industry location and welfare when transport costs are endogenous," Working Papers 32349, Institut National de la Recherche Agronomique, France.
  10. repec:spo:wpecon:info:hdl:2441/9328 is not listed on IDEAS
  11. Takahashi, Takaaki, 1998. "On the optimal policy of infrastructure provision across regions," Regional Science and Urban Economics, Elsevier, vol. 28(2), pages 213-235, March.

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