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Agglomeration with Human and Physical Capital: an Analytically Solvable Case

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Forslid, Rikard
Abstract

This paper suggests a simple modification of the core-periphery model by Krugman (1991), which makes the model easy to solve analytically. We use the modified model to analyse the tendencies for geographical agglomeration of manufacturing industry as regions integrate economically. Two cases of human capital mobility and physical or knowledge capital moblity are treated separately. In the human capital case the model behaves qualitatively just as the core-periphery model, where manufacturing tends to agglomerate for low trade costs. In the physical capital case, on the contrary, agglomeration will not occur as a consequence of economic integration.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2102.

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Date of creation: Mar 1999
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Handle: RePEc:cpr:ceprdp:2102

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Related research
Keywords: Agglomeration; Capital Mobility; Economic Geography;

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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
F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
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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  1. Krugman, Paul R & Venables, Anthony J, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, MIT Press, vol. 110(4), pages 857-80, November. [Downloadable!] (restricted)
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  2. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring. [Downloadable!] (restricted)
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  3. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476.
  4. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-59, May.
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  5. Xavier Vives, 1990. "Trade Association Disclosure Rules, Incentives to Share Information, and Welfare," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 409-430, Autumn. [Downloadable!] (restricted)
  6. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  7. Ottaviano, Gianmarco Ireo Paolo & Thisse, Jacques-François, 1998. "Agglomeration and Trade Revisited," CEPR Discussion Papers 1903, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Satu Nivalainen, 2004. "Where do migrants go? An analysis of urban and rural destined/originated migration in Finland in 1996-99," ERSA conference papers ersa04p317, European Regional Science Association. [Downloadable!]
  2. Michael Pflüger, 2003. "A Simple, Analytically Solvable, Chamberlinian Agglomeration Model," Discussion Papers of DIW Berlin 339, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  3. Pekkala, Sari, 2000. "Migration In A Core-Periphery Model: Analysis Of Agglomeration In Regional Growth Centres," ERSA conference papers ersa00p33, European Regional Science Association. [Downloadable!]
  4. Baldwin, Richard & Krugman, Paul, 2000. "Agglomeration, Integration and Tax Harmonization," CEPR Discussion Papers 2630, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  5. Helena Marques, 2004. "The skilled U-shaped Europe: is it really and on which side does it stand?," Discussion Paper Series 2004_06, Department of Economics, Loughborough University, revised Mar 2004. [Downloadable!]
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  6. 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)
  7. Li, Yao, 2007. "Capital liberalization, industrial agglomeration and wage inequality," MPRA Paper 11355, University Library of Munich, Germany, revised May 2008. [Downloadable!]
  8. Fabrice Darrigues & Jean-Marc Montaud, 2001. "Les pays du sud doivent-ils craindre l'élargissement de l'UEM aux PECO ?," Documents de travail 63, Groupe d'Economie du Développement de l'Université Montesquieu Bordeaux IV. [Downloadable!]
  9. Pasquale Commendatore & Martin Currie & Ingrid Kubin, 2005. "Footloose Entrepreneurs, Taxes and Subsidies," The School of Economics Discussion Paper Series 0521, Economics, The University of Manchester. [Downloadable!]
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  10. Lapo Valentina, 2003. "Spatial distribution of investment in Russia: the effect of agglomeration," EERC Working Paper Series 01-087e, EERC Research Network, Russia and CIS. [Downloadable!]
  11. Candau, Fabien, 2006. "The Spatial and Public Economics of Regions, a Theoretical and Empirical Survey," MPRA Paper 1153, University Library of Munich, Germany. [Downloadable!]
  12. 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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  13. Ovaskainen, Marko & Ritsilä, Jari, 2000. "Electronic Commerce And Regional Economies - Concentration Vs. Centralisation," ERSA conference papers ersa00p79, European Regional Science Association. [Downloadable!]
  14. Kurt A. Hafner, 2006. "Agglomeration, Migration and Tax Competition," DEGIT Conference Papers c011_027, DEGIT, Dynamics, Economic Growth, and International Trade. [Downloadable!]
  15. Suedekum, Jens, 2004. "Increasing Returns and Spatial Unemployment Disparities," Discussion Paper Series 26358, Hamburg Institute of International Economics. [Downloadable!]
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  16. Satu Nivalainen, 2003. "Who move to rural areas? Micro Evidence from Finland," ERSA conference papers ersa03p214, European Regional Science Association. [Downloadable!]
  17. 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!]
  18. Pflüger, Michael, 2001. "A Simple, Analytically Solvable Chamberlinian Agglomeration Model," IZA Discussion Papers 359, Institute for the Study of Labor (IZA). [Downloadable!]
  19. Jens Suedekum & Michael Pflueger, 2004. "Optimal agglomeration and regional policy," ERSA conference papers ersa04p341, European Regional Science Association. [Downloadable!]
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