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Trade is not necessary for agglomeration to arise

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  • BEHRENS, Kristian

    ()
    (LATEC - CNRS UMR 5118 - MSH - Université de Bourgogne)

Abstract

We develop a spatial general equilibrium model in which the absence of trade is an endogenous outcome and we show that trade is not a necessary condition for agglomeration to arise. More precisely, extending the model developed by Ottaviano et al. [13], we show that equilibria without trade differ significantly from those obtained in the presence of trade. Somewhat surprisingly, equilibrium structures without trade are richer than those with trade, since partial agglomeration becomes a feasible outcome. Equilibria now depend on the ratio of mobile to immobile factors and an increase in that ratio triggers a process of spatial agglomeration. / Nous développons un modèle d'équilibre général spatial dans lequel l'absence de commerce est un résultat endogène et nous montrons que le commerce n'est pas une condition nécessaire à l'agglomération. Plus précisément, nous étendons le modèle de Ottaviano et al. [13] et nous montrons que les équilibres sans commerce diffèrent significativement de ceux obtenus avec commerce. Il est surprenant que les structures d'équilibre sans commerce sont plus riches que celles avec, puisque l'agglomération partielle peut se produire. Les équilibres dépendent du ratio de facteurs mobiles et immobiles; un accroissement de ce ratio mène à un processus d'agglomération spatial.

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Bibliographic Info

Paper provided by LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne in its series LEG - Document de travail - Economie with number 2003-07.

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Length: 30 pages
Date of creation: Apr 2003
Date of revision:
Handle: RePEc:lat:legeco:2003-07

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Keywords: agglomeration; trade; imperfect competition; corner solutions;

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Cited by:
  1. BEHRENS, Kristian, 2003. "International trade and internal geography revisited," LEG - Document de travail - Economie, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne 2003-09, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.

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