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Demand linkages and spatial agglomeration of Indian states

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Author Info

  • Andrzej Cieślik

    ()
    (Faculty of Economic Sciences, University of Warsaw)

  • Sadananda Prusty

    ()
    (Institute of Management Technology)

Abstract

In this paper, we examine the spatial relationship between wages and consumer purchasing power across Indian states to see whether regional demand linkages contribute to spatial agglomeration. We estimate a variety of the market-potential functions derived from the Harris model as well as more recent models of the New Economic Geography. Besides market-potential, we consider housing stock, density of roadways, density of telecom, and dummies to capture cyclical fluctuations as parameters of consumer purchasing power and demand to explore the importance of scale economies and transport costs. The estimation results suggest that all the above factors influence demand linkages between states, which are strong and growing over the period from 1999-2000 to 2007-2008.

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File URL: http://www.wne.uw.edu.pl/inf/wyd/WP/WNE_WP44.pdf
File Function: First version, 2011
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Bibliographic Info

Paper provided by Faculty of Economic Sciences, University of Warsaw in its series Working Papers with number 2011-04.

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Length: 25 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:war:wpaper:2011-04

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Related research

Keywords: Spatial agglomeration; Scale economies; Wage differentials; Regional studies;

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  1. repec:hal:cesptp:halshs-00096285 is not listed on IDEAS
  2. Marius Brülhart & Matthieu Crozet & Pamina Koenig, 2004. "Enlargement and the EU Periphery: The Impact of Changing Market Potential," The World Economy, Wiley Blackwell, vol. 27(6), pages 853-875, 06.
  3. Frank G. van Oort, 2007. "Spatial and sectoral composition effects of agglomeration economies in the Netherlands," Papers in Regional Science, Wiley Blackwell, vol. 86(1), pages 5-30, 03.
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