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The footloose entrepreneur model with heterogeneous productivity firms

Author

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  • Po-Hao Lu

    (National Taipei University)

  • Jyh-Fa Tsai

    (National Taipei University)

Abstract

This paper develops a footloose entrepreneur model with heterogeneous productivity in a country. In differing from von Ehrlich and Seidel (2013), our model shows that raising the heterogeneity of firms does not always foster industrial agglomeration, because the elasticity of substitution of products plays a dispersion role in industrial spatial distribution. When the elasticity of substitution is high, raising the heterogeneity of firms will tend to form a spatial symmetric distribution. On the other hand, when the elasticity of substitution is low, raising the heterogeneity of firms will tend to form a core-periphery distribution.

Suggested Citation

  • Po-Hao Lu & Jyh-Fa Tsai, 2024. "The footloose entrepreneur model with heterogeneous productivity firms," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 72(3), pages 691-710, March.
    • Handle: RePEc:spr:anresc:v:72:y:2024:i:3:d:10.1007_s00168-023-01216-3
    DOI: 10.1007/s00168-023-01216-3
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    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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