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Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'

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Author Info
Ottaviano, Gianmarco Ireo Paolo
Puga, Diego

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Abstract

This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. Agglomeration raises the price of immobile local factors and goods, however, so for low transport costs, firms may spread to regions where those prices are lower.

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Publisher Info
Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1699.

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Date of creation: Oct 1997
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Handle: RePEc:cpr:ceprdp:1699

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Related research
Keywords: Agglomeration; Economic Geography; Integration; Linkages; Location; Migration;

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
F15 - International Economics - - Trade - - - Economic Integration
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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This page was last updated on 2009-11-25.

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