Core-Periphery Market Failure in the Location of Economic Activity
AbstractUsing a simplified theoretical model, we illustrate the potential existence of a market failure in the location of economic activity, which could lead to an exaggerated concentration in the core region. Based on this, we analyze whether a public policy intervention of decreasing the mobility costs of production factors could lead to the elimination of, or at least a decrease in, the consequences of a market failure. We show that the market failure can be eliminated only when the reduction in mobility costs is made concurrently with changing exogenous conditions in the peripheral regions (such as improvements in infrastructure).
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Bibliographic InfoArticle provided by Southern Regional Science Association in its journal Review of Regional Studies.
Volume (Year): 39 (2009)
Issue (Month): 1 ()
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Find related papers by JEL classification:
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- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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- R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Government Policy; Regulatory Policy
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