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Economic geography meets Hotelling: the home-sweet-home effect

Author

Listed:
  • Sofia B. S. D. Castro

    (University of Porto)

  • João Correia-da-Silva

    (University of Porto)

  • José M. Gaspar

    (Universidade Católica Portuguesa
    University of Porto)

Abstract

We introduce heterogeneous preferences for location in 2-region core-periphery models, thereby generating an additional dispersive force: the home-sweet-home effect. Different forms of heterogeneity in preferences for location induce different long-run spatial distributions of economic activity, depending on the short-run equilibrium model and the distribution of preferences for location that are considered. Our analysis highlights the importance of the convexity/concavity properties of utility from consumption and utility from location, as functions of the spatial distribution of economic activity.

Suggested Citation

  • Sofia B. S. D. Castro & João Correia-da-Silva & José M. Gaspar, 2022. "Economic geography meets Hotelling: the home-sweet-home effect," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 183-209, February.
    • Handle: RePEc:spr:joecth:v:73:y:2022:i:1:d:10.1007_s00199-020-01331-8
    DOI: 10.1007/s00199-020-01331-8
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    More about this item

    Keywords

    New economic geography; Core-periphery model; Heterogeneous agents; Preferences for location;
    All these keywords.

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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