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Microfoundations of Urban Agglomeration Economies

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Duranton, Gilles
Puga, Diego

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Abstract

This Paper studies the theoretical micro-foundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterization of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modeling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4062.

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Date of creation: Sep 2003
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Handle: RePEc:cpr:ceprdp:4062

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Keywords: agglomeration; cities; increasing returns; micro-foundations;

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Find related papers by JEL classification:
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
R32 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Other Production and Pricing Analysis

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