Agglomeration Effects and the Competition for Firms
AbstractA two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may be part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.
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Bibliographic InfoArticle provided by Springer in its journal International Tax and Public Finance.
Volume (Year): 11 (2004)
Issue (Month): 5 (09)
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Web page: http://www.springerlink.com/link.asp?id=102915
Other versions of this item:
- Robin Boadway & Katherine Cuff & Nicolas Marceau, 2003. "Agglomeration Effects and the Competition for Firms," Cahiers de recherche 0324, CIRPEE.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
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