Growth and Agglomeration
AbstractThis article presents a model in which growth and geographic agglomeration of economic activities are mutually self-reinforcing processes. Economic agglomeration in one region spurs growth because it reduces the cost of innovation in that region through a pecuniary externality due to transaction costs. Growth fosters agglomeration because, as the sector at the origin of innovation expands, new firms tend to locate close to this sector. Agglomeration implies that all innovation and most production activities take place in the core region. However, as new firms are continuously created in the core, some relocate their production to the periphery.
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Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 1996-14.
Date of creation: Dec 1996
Date of revision:
Other versions of this item:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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