Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions
AbstractThis paper extends the Puga (1999) model by introducing urban frictions. It assumes that the agglomeration of manufacturing in a city imposes a cost on the inhabitants of the agglomerated region. Furthermore, an implicit function methodology is developed to provide a numerical stability function that does not require prior analytical work. Simulations reveal that these numerical stability conditions are consistent with the original Puga (1999) analytical predictions. The central finding is that the extension significantly alters the agglomeration properties of the original Puga framework. In particular, partial agglomeration becomes a stable long run outcome in both with and without migration. Furthermore, the level of sensitivity of the agglomeration to the friction cost market parameters is shown to be different in the both cases. This outlines the need to evaluate the imperfectness of migration when modifying the urban geography as a policy implication.
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Bibliographic InfoPaper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0702.
Date of creation: Jan 2007
Date of revision:
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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
Phone: +44 (0)1227 764000
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Web page: http://www.ukc.ac.uk/economics/
Find related papers by JEL classification:
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-11 (All new papers)
- NEP-GEO-2007-06-11 (Economic Geography)
- NEP-URE-2007-06-11 (Urban & Real Estate Economics)
You can help add them by filling out this form.
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