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Agglomeration and Returns to Scale with Capital and Public Goods in a Multi-Regional Economy

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  • Wei-Bin Zhang

Abstract

This paper develops a multi-regional growth model with amenity, capital accumulation and regional public goods. The economy consists of any number of regions and each region consists of the industrial sector and public sector. The industrial sector provides goods in perfectly competitive markets. The public sector, which is financed by the regional government's tax incomes, supplies regional public goods. The public goods affect both firms and households. We show the existence of a unique equilibrium in the dynamic system. The comparative statics analysis also provides some important insights. For instance, if environmental improvement occurs in the advanced (less advanced) region, the national output rises (falls). If a region has a high rate of technological change and the other region remains technologically stationary, economic activities and labor force tend to be located in the technologically advancing region. If the propensity to save is increased, national output is increased and more people will be located in the technologically advanced region.

Suggested Citation

  • Wei-Bin Zhang, 2009. "Agglomeration and Returns to Scale with Capital and Public Goods in a Multi-Regional Economy," International Economic Journal, Taylor & Francis Journals, vol. 23(1), pages 81-109.
  • Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:81-109 DOI: 10.1080/10168730802696673
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    References listed on IDEAS

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    Cited by:

    1. Wei-Bin Zhang, 2014. "Multi-regional economic growth with public good and regional fiscal policies in a small-open economy," The Annals of Regional Science, Springer;Western Regional Science Association, pages 409-429.
    2. wei-bin zhang, 2016. "Public Debt and Economic Growth in Uzawa?s Two-Sector Model with Public Goods," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 5(4), pages 51-72, December.

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