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Integration, agglomeration and the political economics of factor mobility

  • Ottaviano, Gianmarco I. P.
  • Thisse, Jacques-Francois

This paper tackles the issue of the optimality of agglomeration in a two-region economy with skilled/mobile and unskilled/immobile workers. The market leads to the optimal outcome when transport costs are high or low. However, for intermediate values, it yields agglomeration whereas dispersion is socially desirable. We show that competitive lobbying on factor mobility by the two groups of workers sustains the second best optimum.

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Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 83 (2002)
Issue (Month): 3 (March)
Pages: 429-456

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Handle: RePEc:eee:pubeco:v:83:y:2002:i:3:p:429-456
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505578

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