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Regional Specialization via Differences in Transport Costs: An Economic Geography Approach

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  • Hajime Takatsuka

    ()

  • Dao-Zhi Zeng

    ()

Abstract

The regional specialization via differences in transport costs are observed in Japanese manufacturing industries. Concretely, industries with high transport costs for their products, such as iron and steel, petroleum and coal products, remained close to the core region while industries with low transport costs, such as electrical machinery, precision instruments, have relocated to the periphery region. The purpose of this paper is to give a theoretical foundation for this fact by use of a new economic geography model with multiple industries. The urban costs and congestion are explicitly included in the model. We obtain the following results. First, if congestion does not exist, at most one industry disperses when transport and commuting costs are sufficiently small. Furthermore, regional specialization occurs in which industries having higher adjusted transport costs (which are defined as the ratios of transport costs to the number of varieties) than that of the dispersing industry agglomerate in one region. Second, in the case of strong congestion, plural industries might disperse even if transport and commuting costs are small, but as the degree of congestion decreases, the location will change to complete regional specialization. Keywords: regional specialization, economic geography, transport costs, urban costs, congestion.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa04p329.

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Date of creation: Aug 2004
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Handle: RePEc:wiw:wiwrsa:ersa04p329

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  1. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  2. Fujita,Masahisa & Thisse,Jacques-Francois, 2002. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521801386, December.
  3. PICARD, Pierre & ZENG, Dao-Zhi, 2003. "Agricultural sector and industrial agglomeration," CORE Discussion Papers 2003022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Puga, Diego & Venables, Anthony J., 1996. "The Spread of Industry: Spatial Agglomeration in Economic Development," Journal of the Japanese and International Economies, Elsevier, vol. 10(4), pages 440-464, December.
  5. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-Francois Tissse, 1999. "Agglomeration and Trade Revisited," CIRJE F-Series CIRJE-F-65, CIRJE, Faculty of Economics, University of Tokyo.
  6. Krugman, Paul & Venables, Anthony J., 1996. "Integration, specialization, and adjustment," European Economic Review, Elsevier, vol. 40(3-5), pages 959-967, April.
  7. Fujita, Masahisa & Krugman, Paul & Mori, Tomoya, 1999. "On the evolution of hierarchical urban systems1," European Economic Review, Elsevier, vol. 43(2), pages 209-251, February.
  8. Tabuchi, Takatoshi, 1998. "Urban Agglomeration and Dispersion: A Synthesis of Alonso and Krugman," Journal of Urban Economics, Elsevier, vol. 44(3), pages 333-351, November.
  9. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
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