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Agglomeration and growth: the effects of commuting costs

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  • Antonio Accetturo

    (Bank of Italy, Regional Economic Research Staff, Milan Branch)

Abstract

We present a model of industrial location and endogenous growth with congestion costs. According to the interplay between knowledge spillovers and commuting costs, we are able to obtain both a Krugman-type and a bell-shaped agglomeration outcome. In the first case, the economy experiences a permanent income inequality in the steady state and income divergence in the transitional dynamics. In the second case, we observe an enlargement of the industrial core of the economy with a strong catching up by the periphery. Welfare analysis shows that congestion create (in the bell-shaped agglomeration case) a negative welfare effect on peripheral unskilled workers and renders the agglomerated equilibrium Pareto inferior to dispersion.

Suggested Citation

  • Antonio Accetturo, 2008. "Agglomeration and growth: the effects of commuting costs," Temi di discussione (Economic working papers) 688, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_688_08
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    References listed on IDEAS

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    7. Charlot, Sylvie & Gaigne, Carl & Robert-Nicoud, Frederic & Thisse, Jacques-Francois, 2006. "Agglomeration and welfare: The core-periphery model in the light of Bentham, Kaldor, and Rawls," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 325-347, January.
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    Cited by:

    1. Fujishima, Shota, 2013. "Growth, agglomeration, and urban congestion," Journal of Economic Dynamics and Control, Elsevier, vol. 37(6), pages 1168-1181.
    2. Mark D. Partridge, 2010. "The duelling models: NEG vs amenity migration in explaining US engines of growth," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 513-536, August.
    3. Abhinav Alakshendra & Ziming Li, 2020. "Local Governments’ Impact on Market Accessibility of Enterprises: Understanding the Location Choices of Enterprises in Hajipur, India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 119-142, March.
    4. Yuhui Guo & Zhiwei Tang & Jie Guo, 2020. "Could a Smart City Ameliorate Urban Traffic Congestion? A Quasi-Natural Experiment Based on a Smart City Pilot Program in China," Sustainability, MDPI, vol. 12(6), pages 1-19, March.
    5. Antonio Accetturo & Michele Cascarano & Guido de Blasio, 2019. "Pirate Attacks and the Shape of the Italian Urban System," DEM Working Papers 2019/15, Department of Economics and Management.
    6. Colin Davis & Ken-Ichi Hashimoto, 2015. "Industry Concentration, Knowledge Diffusion and Economic Growth Without Scale Effects," Economica, London School of Economics and Political Science, vol. 82(328), pages 769-789, October.
    7. Pindado, Emilio & Sánchez, Mercedes & García Martínez, Marian, 2023. "Entrepreneurial innovativeness: When too little or too much agglomeration hurts," Research Policy, Elsevier, vol. 52(1).

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    More about this item

    Keywords

    Congestion; Endogenous Growth; Migration;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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