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A simple model of economic geography a la Helpman-Tabuchi

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  • Murata, Yasusada
  • Thisse, Jacques-Francois

Abstract

This paper explores the interplay between commodities’ transportation costs and workers’ commuting costs within a general equilibrium framework à la Dixit-Stiglitz. Workers are mobile and choose a region to work in as well as an intra-urban location in which to live. We show that a more integrated economy need not be more agglomerated. Instead, low transportation costs lead to the dispersion of economic activities. This is because workers are able to alleviate the burden of urban costs by being dispersed, while retaining a good access to all varieties. By contrast, low commuting costs foster the agglomeration of economic activities.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 58 (2005)
Issue (Month): 1 (July)
Pages: 137-155

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Handle: RePEc:eee:juecon:v:58:y:2005:i:1:p:137-155

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Web page: http://www.elsevier.com/locate/inca/622905

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  1. Raul Livas Elizondo & Paul Krugman, 1992. "Trade Policy and the Third World Metropolis," NBER Working Papers 4238, National Bureau of Economic Research, Inc.
  2. Alex Anas, 2004. "Vanishing cities: what does the new economic geography imply about the efficiency of urbanization?," Journal of Economic Geography, Oxford University Press, Oxford University Press, vol. 4(2), pages 181-199, April.
  3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, American Economic Association, vol. 67(3), pages 297-308, June.
  4. Takatoshi Tabuchi & Jacques-Francois Thisse, 2003. "Regional Specialization, Urban Hierarchy, and Commuting Costs," CIRJE F-Series, CIRJE, Faculty of Economics, University of Tokyo CIRJE-F-223, CIRJE, Faculty of Economics, University of Tokyo.
  5. Gilles Duranton & Diego Puga, 2000. "Nursery Cities: Urban diversity, process innovation, and the life-cycle of products," Working Papers, University of Toronto, Department of Economics dpuga-00-01, University of Toronto, Department of Economics.
  6. Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 1998. "Agglomeration and Trade Revisited," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1903, C.E.P.R. Discussion Papers.
  7. Ottaviano, Gianmarco Ireo Paolo & Robert-Nicoud, Frédéric, 2004. "The 'Genome' of NEG Models with Vertical Linkages: A Positive and Normative Synthesis," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4600, C.E.P.R. Discussion Papers.
  8. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  9. Robert-Nicoud, Frédéric, 2004. "The Structure of Simple 'New Economic Geography' Models," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4326, C.E.P.R. Discussion Papers.
  10. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, Elsevier, vol. 44(3), pages 333-351, November.
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