Scale Economies, Unemployment, and Industry Agglomeration
AbstractThis paper tries to resolve the paradox raised by Corden and Findlay (1975). In this paper, it is assumed that Manufacture sector has scale economies. Both factor prices and product prices can adjust in a general equilibrium system. In a closed economy, this paper concludes that, with the expansion of capital stock both the unemployment rate and the absolute amount of unemployment will decrease. In an open economy, this paper sets up an asymmetric model, of which only one region has fixed wage rate. It will help us to investigate how the trading cost would affect the unemployment and output of the region, which may give some helpful policy implications.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0511004.
Length: 12 pages
Date of creation: 09 Nov 2005
Date of revision:
Note: Type of Document - pdf; pages: 12
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fixed wage rate; unemployment; agglomeration;
Find related papers by JEL classification:
- F1 - International Economics - - Trade
- F2 - International Economics - - International Factor Movements and International Business
This paper has been announced in the following NEP Reports:
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- Ottaviano, Gianmarco I. P., 2001.
"Monopolistic competition, trade, and endogenous spatial fluctuations,"
Regional Science and Urban Economics,
Elsevier, vol. 31(1), pages 51-77, February.
- Ottaviano, Gianmarco Ireo Paolo, 1996. "Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations," CEPR Discussion Papers 1327, C.E.P.R. Discussion Papers.
- Gianmarco Ottaviano, 1996. "Monopolistic Competition, Trade and Endogenous Spatial Fluctuations," Working Papers 240, Dipartimento Scienze Economiche, Universita' di Bologna.
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