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Agglomeration in a global Economy: A Survey

This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs, the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. However, agglomeration raises the price of immobile local factors and goods, so far low transport costs firms may spread to regions where those prices are lower.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0356.

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Date of creation: Aug 1997
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Handle: RePEc:cep:cepdps:dp0356
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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