On the evolution of a multi-regional system
AbstractWe study the effects of a decrease in trade costs on the spatial distribution of industry in a multi-regional economy, when a rise in the regional population of workers generates higher urban costs. We show that high and low trade costs imply that all regions involve a positive share of the industrial sector. When urban costs are linear, there exists a stable equilibrium for almost all values of trade costs. Furthermore, as trade costs fall, there is a path of stable equilibria such that the industry is, first, agglomerated into a decreasing number of regions and, then, dispersed among a growing number of regions. The second phase arises because of the increasing urban costs associated with the process of agglomeration.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001003.
Date of creation: 00 Jan 2001
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multi-regional system; economic geography; agglomeration; transport costs; urban costs;
Other versions of this item:
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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