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Limits to industrial agglomeration

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  • Junius, Karsten
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    Abstract

    This paper presents an economic geography model to show the spatial effects of economic integration. While other authors mainly focused on the explanation of cumulative causation effects that lead to complete concentration or absolutely equal dispersion of industries, this paper explains why limits to industrial agglomeration can be observed in reality. It argues that cumulative causation effects can be counterbalanced by further centrifugal forces such as land rents, adverse self-fulfilling expectations and congestion effects. For large scale agglomerations, congestion effects may be the most relevant force that stop a cumulative trend towards complete concentration caused by scale economies and trade costs.

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    File URL: http://econstor.eu/bitstream/10419/46880/1/257762817.pdf
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    Bibliographic Info

    Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 762.

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    Date of creation: 1996
    Date of revision:
    Handle: RePEc:kie:kieliw:762

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    Related research

    Keywords: Economic Geography; Agglomeration; Congestion; Location Theory;

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    References

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    1. Murphy, Kevin M. & Shleifer, Andrei & Vishny, Robert W., 1989. "Industrialization and the Big Push," Scholarly Articles 3606235, Harvard University Department of Economics.
    2. Fujita, Masahisa & Krugman, Paul & Mori, Tomoya, 1999. "On the evolution of hierarchical urban systems1," European Economic Review, Elsevier, vol. 43(2), pages 209-251, February.
    3. 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.
    4. Carlos M. Asilis & Luis Rivera-Batiz, 1994. "Geography, Trade Patterns, and Economic Policy," IMF Working Papers 94/16, International Monetary Fund.
    5. Fukao, Kyoji & Benabou, Roland, 1993. "History versus Expectations: A Comment," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 535-42, May.
    6. Yang, Xiaokai & Heijdra, Ben J, 1993. "Monopolistic Competition and Optimum Product Diversity: Comment," American Economic Review, American Economic Association, vol. 83(1), pages 295-301, March.
    7. Krugman, Paul & Elizondo, Raul Livas, 1996. "Trade policy and the Third World metropolis," Journal of Development Economics, Elsevier, vol. 49(1), pages 137-150, April.
    8. Ethier, Wilfred J, 1982. "National and International Returns to Scale in the Modern Theory of International Trade," American Economic Review, American Economic Association, vol. 72(3), pages 389-405, June.
    9. Kanemoto, Yoshitsugu, 1975. "Congestion and cost-benefit analysis in cities," Journal of Urban Economics, Elsevier, vol. 2(3), pages 246-264, July.
    10. Dixit, Avinash K & Stiglitz, Joseph E, 1993. "Monopolistic Competition and Optimum Product Diversity: Reply," American Economic Review, American Economic Association, vol. 83(1), pages 302-04, March.
    11. 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.
    12. Elise Brezis & Paul Krugman, 1993. "Technology and the Life Cycle of Cities," NBER Working Papers 4561, National Bureau of Economic Research, Inc.
    13. Markusen, James R, 1989. "Trade in Producer Services and in Other Specialized Intermediate Inputs," American Economic Review, American Economic Association, vol. 79(1), pages 85-95, March.
    14. Brakman, S. & Garretsen, H. & Gigengack, R. & van Marrewijk, C. & Wagenvoort, R., 1993. "Congestion and Industrial Location," Papers 554, Groningen State, Institute of Economic Research-.
    15. Krugman, Paul & Venables, Anthony J., 1990. "Integration and the Competitiveness of Peripheral Industry," CEPR Discussion Papers 363, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:
    1. Junius, Karsten, 1996. "Economic development and industrial concentration: An inverted U-curve," Kiel Working Papers 770, Kiel Institute for the World Economy.
    2. Stiller, Silvia, 2000. "European Regional Policy In The Light Of The New Economic Geography," ERSA conference papers ersa00p298, European Regional Science Association.
    3. Lammers, Konrad & Stiller, Silvia, 2000. "Regionalpolitische Implikationen der neuen ökonomischen Geographie," HWWA Discussion Papers 85, Hamburg Institute of International Economics (HWWA).

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