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Agglomeration and Trade Revisited

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  • Ottaviano, Gianmarco Ireo Paolo
  • Thisse, Jacques-François

Abstract

The purpose of this paper is two-fold. First, we present a model of agglomeration and trade that displays the main features of the recent economic geography literature, while allowing for the derivation of analytical results by means of simple algebra. Second, we show how this framework can be used to tackle the following important issues: (i) the impact on agglomeration of alternative pricing policies used in the space-economy, with a special focus on the distinction between segmented and integrated markets; (ii) a forward-looking approach to the dynamics of migration in the process of agglomeration, instead of the simple Marshallian model used so far in the economic geography literature.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1903.

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Date of creation: Jun 1998
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Handle: RePEc:cpr:ceprdp:1903

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Keywords: Agglomeration; Monopolistic Competition; spatial price policy; Trade;

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References

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  1. Fukao, Kyoji & Benabou, Roland, 1993. "History versus Expectations: A Comment," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 535-42, May.
  2. Diego Puga, 1996. "The Rise and Fall of Regional Inequalities," CEP Discussion Papers dp0314, Centre for Economic Performance, LSE.
  3. Krugman, Paul & Venables, Anthony J., 1990. "Integration and the Competitiveness of Peripheral Industry," CEPR Discussion Papers 363, C.E.P.R. Discussion Papers.
  4. Anderson, S. P. & Schmitt, N. & Thisse, J.-F., . "Who benefits from antidumping legislation?," CORE Discussion Papers RP -1146, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  6. Kiminori Matsuyama, 1990. "Increasing Returns, Industrialization and Indeterminacy of Equilibrium," Discussion Papers 878, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  8. Paul Krugman, 1998. "Space: The Final Frontier," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 161-174, Spring.
  9. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
  10. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Wiley Blackwell, vol. 43(2), pages 217-35, June.
  11. Krugman, Paul, 1991. "History versus Expectations," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 651-67, May.
  12. Mussa, Michael, 1978. "Dynamic Adjustment in the Heckscher-Ohlin-Samuelson Model," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 775-91, October.
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