Peaks and troughs in the spatial distributions of population, employment and wealth are a universal phenomenon in search of a general theory. Such spatial imbalances have two possible explanations. In the first, uneven economic development can be seen as the result of the uneven distribution of natural resources. This is sometimes called ‘first nature’ and refers to exogenously given characteristics of different sites. It falls short of providing a reasonable explanation of many other clusters of activities, however, which are much less dependent on natural advantage. The aim of geographical economics is precisely to understand what are the economic forces that, after controlling for first nature, account for ‘second nature’, which emerges as the outcome of human beings’ actions to improve upon the first one. Specifically, geographical economics asks what are the economic forces that can sustain a large permanent imbalance in the distributions of economic activities. In this Paper, we focus on the so-called ‘new economic geography’ approach. After having described some of the main results developed in standard location theory, we use a unified framework to survey the home market effect as well as core-periphery models. Geographers have criticized these models because they accounts for some spatial costs while putting others aside without saying why. Furthermore, core-periphery models also exhibit some extreme features that are reflected in their bang-bang outcomes. We thus move on by investigating what the outcomes of core-periphery models become when we account for a more complete and richer description of the spatial aspects that these models aim at describing. We conclude by suggesting new lines of research.
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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.
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Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F16 - International Economics - - Trade - - - Trade and Labor Market Interactions 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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Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-FranÁois Thisse, 2002.
"Agglomeration and Trade Revisited,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 409-436, May.
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OTTAVIANO, Gianmarco & TABUCHI, Takatoshi & THISSE, Jacques-Franois, 1999.
"Agglomeration and trade revisited,"
CORE Discussion Papers
1999041, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
[Downloadable!]
Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-Francois Tissse, 1999.
"Agglomeration and Trade Revisited,"
CIRJE F-Series
CIRJE-F-65, CIRJE, Faculty of Economics, University of Tokyo.
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Head, Keith & Mayer, Thierry & Ries, John, 2002.
"On the Pervasiveness of Home Market Effects,"
Economica,
London School of Economics and Political Science, vol. 69(275), pages 371-90, August.
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PICARD, Pierre & THISSE, Jacques-Franois & TOULEMONDE, Eric, 2002.
"Economic geography and the role of profits,"
CORE Discussion Papers
2002027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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