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Location Dynamics and Knowledge Agglomeration

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  • Orlando Gomes

Abstract

A simple economic activity location rule is considered. Under this rule, one regards that location decisions depend on the presence or the absence of agglomeration economies. Considering a three-location economy, the system that is built leads, under certain conditions, to a saddle-path equilibrium, relatively to which we verify that the most interesting dynamics are associated not with the eventual convergence to the steady state (the saddle-path), that occurs only under exceptional circumstances, but with the divergence process away from the steady state. To explain the dynamics of the agglomeration economies, a knowledge variable is assumed. Returning to a two location economy one is able to assess in graphical terms the relation between distribution of knowledge and location of economic activities.

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File URL: http://128.118.178.162/eps/urb/papers/0409/0409012.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Urban/Regional with number 0409012.

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Length: 15 pages
Date of creation: 28 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpur:0409012

Note: Type of Document - pdf; pages: 15
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Web page: http://128.118.178.162

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Keywords: location decisions; dynamic systems; knowledge; technology; agglomeration economies;

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  1. Robert E. Lucas, Jr., 2001. "Externalities and Cities," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(2), pages 245-274, April.
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  9. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
  10. Anthony Venables, 2001. "Geography and International Inequalities: The Impact of New Technologies," Journal of Industry, Competition and Trade, Springer, vol. 1(2), pages 135-159, June.
  11. Danny Quah, 2000. "Internet Cluster Emergence," CEP Discussion Papers dp0441, Centre for Economic Performance, LSE.
  12. 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, December.
  13. Danny Quah, 2002. "Spatial Agglomeration Dynamics," CEP Discussion Papers dp0521, Centre for Economic Performance, LSE.
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