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Agglomeration and growth: the effects of commuting costs

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  • Antonio Accetturo

    (Bank of Italy, Regional Economic Research Staff, Milan Branch)

Abstract

We present a model of industrial location and endogenous growth with congestion costs. According to the interplay between knowledge spillovers and commuting costs, we are able to obtain both a Krugman-type and a bell-shaped agglomeration outcome. In the first case, the economy experiences a permanent income inequality in the steady state and income divergence in the transitional dynamics. In the second case, we observe an enlargement of the industrial core of the economy with a strong catching up by the periphery. Welfare analysis shows that congestion create (in the bell-shaped agglomeration case) a negative welfare effect on peripheral unskilled workers and renders the agglomerated equilibrium Pareto inferior to dispersion.

Suggested Citation

  • Antonio Accetturo, 2008. "Agglomeration and growth: the effects of commuting costs," Temi di discussione (Economic working papers) 688, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_688_08
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    Cited by:

    1. Xie, Lin & Wang, Shaozhuang & Yan, Lingxiao, 2024. "Distributional effects of expressway access on rural entrepreneurial activities in China," Socio-Economic Planning Sciences, Elsevier, vol. 94(C).
    2. Yuhui Guo & Zhiwei Tang & Jie Guo, 2020. "Could a Smart City Ameliorate Urban Traffic Congestion? A Quasi-Natural Experiment Based on a Smart City Pilot Program in China," Sustainability, MDPI, vol. 12(6), pages 1-19, March.
    3. Accetturo, Antonio & Cascarano, Michele & de Blasio, Guido, 2024. "Pirate attacks and the shape of the Italian urban system," Regional Science and Urban Economics, Elsevier, vol. 108(C).
    4. Fujishima, Shota, 2013. "Growth, agglomeration, and urban congestion," Journal of Economic Dynamics and Control, Elsevier, vol. 37(6), pages 1168-1181.
    5. Mark D. Partridge, 2010. "The duelling models: NEG vs amenity migration in explaining US engines of growth," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 513-536, August.
    6. Abhinav Alakshendra & Ziming Li, 2020. "Local Governments’ Impact on Market Accessibility of Enterprises: Understanding the Location Choices of Enterprises in Hajipur, India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 119-142, March.
    7. Pindado, Emilio & Sánchez, Mercedes & García Martínez, Marian, 2023. "Entrepreneurial innovativeness: When too little or too much agglomeration hurts," Research Policy, Elsevier, vol. 52(1).
    8. Colin Davis & Ken-Ichi Hashimoto, 2015. "Industry Concentration, Knowledge Diffusion and Economic Growth Without Scale Effects," Economica, London School of Economics and Political Science, vol. 82(328), pages 769-789, October.

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    Keywords

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    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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