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A simple theory of industry location and residence choice

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  • Rainald Borck
  • Michael Pflüger
  • Matthias Wrede

Abstract

This paper provides a simple theory of geographical mobility which simultaneously explains people’s choice of residences in space and the location of industry. Residences are chosen on the basis of the utility which mobile households obtain across locations. The spatial pattern of industry is determined by the location decision of a scarce essential factor of production which seeks to obtain the highest possible economic return. Our theory comprehends applications to commuting and physical capital mobility. Referring to the decline in mobility costs, we are able to explain that long-distance commuting and foreign direct investment have increased and that industrial activity has become more concentrated both within as well as across countries.

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Bibliographic Info

Article provided by Oxford University Press in its journal Journal of Economic Geography.

Volume (Year): 10 (2010)
Issue (Month): 6 (November)
Pages: 913-940

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Handle: RePEc:oup:jecgeo:v:10:y:2010:i:6:p:913-940

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References

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  1. OTTAVIANO, Gianmarco & THISSE, Jacques-François, 2003. "Agglomeration and economic geography," CORE Discussion Papers 2003016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Takatoshi Tabuchi & Jacques-Francois Thisse, 2003. "Regional Specialization, Urban Hierarchy, and Commuting Costs," CIRJE F-Series CIRJE-F-223, CIRJE, Faculty of Economics, University of Tokyo.
  3. Martin, Philippe & Rogers, Carol Ann, 1994. "Industrial Location and Public Infrastructure," CEPR Discussion Papers 909, C.E.P.R. Discussion Papers.
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  6. Raul Livas Elizondo & Paul Krugman, 1992. "Trade Policy and the Third World Metropolis," NBER Working Papers 4238, National Bureau of Economic Research, Inc.
  7. Ogura, Laudo M., 2005. "Urban growth controls and intercity commuting," Journal of Urban Economics, Elsevier, vol. 57(3), pages 371-390, May.
  8. 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.
  9. Richard E. Baldwin & Philippe Martin, 1999. "Two Waves of Globalisation: Superficial Similarities, Fundamental Differences," NBER Working Papers 6904, National Bureau of Economic Research, Inc.
  10. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
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Cited by:
  1. Rainald Borck & Matthias Wrede, 2008. "Subsidies for Intracity and Intercity Commuting," CESifo Working Paper Series 2321, CESifo Group Munich.
  2. Alexander Ebertz, 2009. "The Determinants of Joint Residential and Job Location Choices: A Mixed Logit Approach," Ifo Working Paper Series Ifo Working Paper Nr. 82, Ifo Institute for Economic Research at the University of Munich.
  3. Sandow, Erika & Westin, Kerstin, 2010. "The persevering commuter - Duration of long-distance commuting," Transportation Research Part A: Policy and Practice, Elsevier, vol. 44(6), pages 433-445, July.
  4. Donald R. Davis & Jonathan I. Dingel, 2012. "A Spatial Knowledge Economy," NBER Working Papers 18188, National Bureau of Economic Research, Inc.
  5. Pflüger, Michael & Tabuchi, Takatoshi, 2010. "The size of regions with land use for production," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 481-489, November.

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