Agglomeration and growth: the effects of commuting costs
AbstractWe 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.
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Bibliographic InfoPaper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 688.
Date of creation: Sep 2008
Date of revision:
Congestion; Endogenous Growth; Migration;
Other versions of this item:
- Antonio Accetturo, 2010. "Agglomeration and growth: The effects of commuting costs," Papers in Regional Science, Wiley Blackwell, vol. 89(1), pages 173-190, 03.
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-11 (All new papers)
- NEP-GEO-2008-11-11 (Economic Geography)
- NEP-MIG-2008-11-11 (Economics of Human Migration)
- NEP-URE-2008-11-11 (Urban & Real Estate Economics)
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