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Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution

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Author Info
Massimo Del Gatto (Faculty of Economics, University of Bologna)

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Abstract

This paper emphasises the importance of the political-institutional dimension in the understanding of the spatial distribution of economic activity. We introduce the notion of Territorial Authority Scale, which refers to the degree of devolution (towards sub-national tiers of government) involved in the authority to decide on Spatial Policy, and propose a model of 'agglomeration in a system of cities' in which both intra-city trade and inter-city trade are considered. Enriching both the literature on integration/agglomeration and that on city size and formation, we show that: i) devolution results in over-agglomeration (fewer cities, which tend to be over-sized) and low welfare; ii) the higher the level of spatial (i.e. transport costs) and economic (i.e. intensity of trade) integration, the higher is the magnitude of the inefficiency. From a theoretical point of view, the paper represents an attempt to import, into geographical economics, a 'scale approach', which is an established approach to the notion of space in sociology.

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Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.93.

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Date of creation: May 2004
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Handle: RePEc:fem:femwpa:2004.93

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Related research
Keywords: Agglomeration; Integration; Cities; Devolution; Economic geography; Transport costs; Spatial policy; Trade; Product variety; Linkages;

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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
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
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
R59 - Urban, Rural, and Regional Economics - - Regional Government Analysis - - - Other

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