Advance Production Duopolies and Posted Prices or Market-Clearing Prices
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 be 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 McMaster University in its series Department of Economics Working Papers with number 2002-08.
Length: 28 pages
Date of creation: Aug 2002
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Find related papers by JEL classification:
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
- R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-10 (All new papers)
- NEP-COM-2003-03-10 (Industrial Competition)
- NEP-GEO-2003-03-10 (Economic Geography)
- NEP-PUB-2003-03-10 (Public Finance)
- NEP-URE-2003-03-10 (Urban & Real Estate Economics)
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