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A simple model of economic geography à la Helpman-Tabuchi

Author

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  • MURATA, Yasudada
  • THISSE, Jacques-François

Abstract

This paper explores the interplay between commodities’ transportation costs and workers’ commuting costs within a general equilibrium framework `a la Dixit-Stiglitz. Workers are mobile and choose a region where to work as well as an intraurban location where to live. We show that a more integrated economy need not be more agglomerated. Instead, low transportation costs lead to the dispersion of economic activities. This is because workers are able to alleviate the burden of urban costs by being dispersed, while retaining a good access to all varieties. By contrast, low commuting costs foster the agglomeration of economic activities.

Suggested Citation

  • MURATA, Yasudada & THISSE, Jacques-François, 2005. "A simple model of economic geography à la Helpman-Tabuchi," LIDAM Discussion Papers CORE 2005017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2005017
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    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)

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