Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations

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Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations

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Ottaviano, Gianmarco Ireo Paolo

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Gianmarco I.P. Ottaviano

Abstract

This paper investigates the possibility of endogenous fluctuations in the international distribution of economic activities in the presence of increasing returns, monopolistic competition, trade and convex adjustment costs without allowing for any local productive externalities. Using a two-country dynamic general equilibrium model, it derives necessary and sufficient conditions for the existence of self-reinforcing relocation processes. It shows that the occurrence of multiple equilibria and endogenous fluctuations is associated with a high degree of increasing returns to scale as well as low trade and adjustment costs. Under such circumstances relocation processes are driven by self-fulfilling expectations

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1327.

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Date of creation: Feb 1996
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Handle: RePEc:cpr:ceprdp:1327

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Article
- Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February. [Downloadable!] (restricted)
Paper
- Gianmarco Ottaviano, 1996. "Monopolistic Competition, Trade and Endogenous Spatial Fluctuations," Working Papers 240, Dipartimento Scienze Economiche, Universita' di Bologna.

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F22 - International Economics - - International Factor Movements and International Business - - - International Migration
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

Cited by:
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Tabuchi, Takatoshi & Thisse, Jacques-François, 2001. "Taste Heterogeneity, Labour Mobility and Economic Geography," CEPR Discussion Papers 3114, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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- TABUCHI, Takatoshi & THISSE, Jacques-Franois, 2001. "Taste heterogeneity, labor mobility and economic geography," CORE Discussion Papers 2001044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
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Francesca Medda & Peter Nijkamp & Piet Rietveld, 1998. "Urban industrial relocation: The theory of edge cities," ERSA conference papers ersa98p326, European Regional Science Association. [Downloadable!]
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- F Medda & P Nijkamp & P Rietveld, 1999. "Urban industrial relocation: the theory of edge cities," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 26(5), pages 751-761, September. [Downloadable!] (restricted)
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Fujita, Masahisa & Thisse, Jacques-François, 2002. "Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Looses From It?," CEPR Discussion Papers 3135, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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- Masahisa Fujita & Jacques-François Thisse, 2003. "Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Loses from It?," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 121-145. [Downloadable!] (restricted)
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Naghavi, Alireza & Ottaviano, Gianmarco Ireo Paolo, 2006. "Outsourcing, Contracts and Innovation Networks," CEPR Discussion Papers 5681, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
Brakman, Steven & Garretsen, Harry & van Marrewijk, Charles, 2002. "Locational Competition and Agglomeration: The Role of Government Spending," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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- Orlando Gomes, 2007. "Space, growth and technology: an integrated dynamic approach," Studies in Economics and Finance, Emerald Group Publishing, vol. 24(4), pages 248-265, September. [Downloadable!] (restricted)
Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 2003. "Agglomeration and Economic Geography," CEPR Discussion Papers 3838, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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- OTTAVIANO, Gianmarco & THISSE, Jacques-Franois, 2003. "Agglomeration and economic geography," CORE Discussion Papers 2003016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
- Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608 Elsevier. [Downloadable!] (restricted)
Brock, William & Xepapadeas, Anastasios, 2008. "General Pattern Formation in Recursive Dynamical Systems Models in Economics," MPRA Paper 12305, University Library of Munich, Germany. [Downloadable!]
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Charles van Marrewijk, 2005. "Geographical Economics and the Role of Pollution on Location," Tinbergen Institute Discussion Papers 05-018/2, Tinbergen Institute. [Downloadable!]
Steven Brakman & Harry Garretsen, 2003. "Rethinking the "New' Geographical Economics," Regional Studies, Taylor and Francis Journals, vol. 37(6-7), pages 637-648, August. [Downloadable!] (restricted)
Jan Kranich, 2007. "Too much R&D? - Vertical differentiation in a model of monopolistic competition," Working Paper Series in Economics 59, University of Lüneburg, Institute of Economics. [Downloadable!]

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