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Industrial configuration in an economy with low transportation costs

Author

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  • Hajime Takatsuka

    ()

  • Dao-Zhi Zeng

    ()

Abstract

We examine how the spatial economy with multiple industries is shaped when interregional trade costs and intraregional commuting costs are low. All industries are characterized by increasing returns to scale and monopolistic competition, and they are differentiated by their trade costs and the degree of intra-industry competition measured by their firm numbers. We find some distinct rules in industrial location. First, at most, one industry disperses, while others agglomerate in a region according to their ratios of relative trade costs to firm numbers. Second, industries with stronger competition constitute a smaller region, while those with higher trade costs compose a larger region. The results are consistent with the classical Weberian location theory and suggest that the degree of intra-industry competition also becomes an essential factor to determine industrial location when transportation costs are small. Finally, the population differential between the regions monotonically decreases in the relative commuting cost. Copyright Springer-Verlag Berlin Heidelberg 2013

Suggested Citation

  • Hajime Takatsuka & Dao-Zhi Zeng, 2013. "Industrial configuration in an economy with low transportation costs," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 593-620, October.
  • Handle: RePEc:spr:anresc:v:51:y:2013:i:2:p:593-620
    DOI: 10.1007/s00168-013-0553-5
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    References listed on IDEAS

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    Keywords

    F12; R12; R30;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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