Agglomeration Effects and the Competition for Firms
AbstractA two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may abe part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.
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Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 0324.
Date of creation: 2003
Date of revision:
Agglomeration; Inter-Jurisdictional Competititon; Unemployment;
Other versions of this item:
- Robin Boadway & Katherine Cuff & Nicolas Marceau, 2004. "Agglomeration Effects and the Competition for Firms," International Tax and Public Finance, Springer, vol. 11(5), pages 623-645, 09.
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-04 (All new papers)
- NEP-GEO-2003-06-04 (Economic Geography)
- NEP-PBE-2003-06-04 (Public Economics)
- NEP-URE-2003-06-04 (Urban & Real Estate Economics)
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