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Fluctuations, Instability, and Agglomeration

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  • Paul Krugman

Abstract

Recent models in economic geography suggest that there may be very large numbers of equilibrium spatial structures. Simulations suggest, however, that the structures that emerge are surprisingly orderly, and often seem approximately to follow simple rules about the spacing of urban sites. This paper offers an explanation in terms of the process by which a spatial economy diverges away from an even distribution of activity across the landscape. It shows that a small divergence of activity away from spatial uniformity, even if it is highly irregular, can be regarded as the sum of a number of simple periodic fluctuations at different spatial 'wavelengths'; these fluctuations grow at different rates. There is a particular 'preferred wavelength' that grows fastest; provided that the initial distribution of activity across space is flat enough, this preferred wavelength eventually dominates the spatial pattern and becomes the typical distance between cities. The approach suggests that surprisingly simple principles of self-organization may lie beneath the surface of models that appear at first to yield hopelessly complex possibilities.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4616.

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Date of creation: Jan 1994
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Handle: RePEc:nbr:nberwo:4616

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  1. Paul R. Krugman, 1991. "First Nature, Second Nature, and Metropolitan Location," NBER Working Papers 3740, National Bureau of Economic Research, Inc.
  2. Arthur, W. Brian, 1990. "'Silicon Valley' locational clusters: when do increasing returns imply monopoly?," Mathematical Social Sciences, Elsevier, vol. 19(3), pages 235-251, June.
  3. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
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Cited by:
  1. Bartlomiej ROKICKI & Mieczyslaw W. SOCHA, 2008. "Effects of Poland's Integration with the EU: Structural Interventions and Economic Development in the Eastern Border Regions," The Journal of Comparative Economic Studies (JCES), The Japanese Society for Comparative Economic Studies (JSCES), vol. 4, pages 81-114, December.
  2. Alberto Franco Pozzolo, 2004. "Research and Development, Regional Spillovers and the Location of Economic Activities," Manchester School, University of Manchester, vol. 72(4), pages 463-482, 07.
  3. Junius, Karsten, 1996. "Limits to industrial agglomeration," Kiel Working Papers 762, Kiel Institute for the World Economy.
  4. Najeb Masoud, 2013. "Neoclassical Economic Growth Theory: An Empirical Approach," Far East Journal of Psychology and Business, Far East Research Centre, vol. 11(2), pages 10-33, June.
  5. Chincarini, Ludwig & Asherie, Neer, 2008. "An analytical model for the formation of economic clusters," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 252-270, May.

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