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Economic Geography: A Review of the Theoretical and Empirical Literature

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  • Stephen Redding

Abstract

This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale and transport costs. After outlining the canonical core and periphery model, the paper examines the empirical evidence on three of its central predictions: the role of market access in deter- mining factor prices, the related home market effect in which demand has a more than proportionate effect on production, and the potential existence of multiple equilibria. In reviewing the evidence, we highlight issues of measurement and identification, alternative potential explanations, and remaining areas for further research.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0904.

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Date of creation: Jan 2009
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Handle: RePEc:cep:cepdps:dp0904

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: New economic geography; market access; home market effect; multiple equilibria;

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Cited by:
  1. Maria Florencia Granato, 2011. "REGIONAL NEW ECONOMIC GEOGRAPHY (refereed paper)," ERSA conference papers ersa10p747, European Regional Science Association.
  2. Viego, Valentina, 2010. "Rendimientos crecientes, costos de transporte, eslabonamientos verticales y asimetrías regionales persistentes
    [Increasing returns, transport costs, vertical linkages and persistent regional inequ    ," MPRA Paper 26881, University Library of Munich, Germany, revised 04 Aug 2010.
  3. Michael Pflüger & Uwe Blien & Joachim Möller & Michael Moritz, 2013. "Literature Overview - Labor Market Effects of Trade and FDI – Recent Advances and Research Gaps," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 233(1), pages 86-116, January.
  4. Irina Hotz, 2012. "Energy endowments, barriers to trade and industry location in Chinese provinces," IRENE Working Papers 12-02, IRENE Institute of Economic Research.

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