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Integration, agglomeration and the political economics of factor mobility

  • OTTAVIANO, Gianmarco
  • THISSE, Jacques-François

This paper tackles the issue of the optimality of agglomeration in a two-region economy with skilled/mobile and unskilled/immobile workers. The market leads to the optimal outcome when transport costs are high or low. However, for intermediate values, it yields agglomeration whereas dispersion is socially desirable. We show that competitive lobbying on factor mobility by the two groups of workers sustains the second best optimum.

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File URL: http://dx.doi.org/10.1016/S0047-2727(00)00166-3
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number -1541.

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Handle: RePEc:cor:louvrp:-1541
Note: In : Journal of Public Economics, 83, 429-456, 2002
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  1. Sala-i-Martin, Xavier X., 1996. "Regional cohesion: Evidence and theories of regional growth and convergence," European Economic Review, Elsevier, vol. 40(6), pages 1325-1352, June.
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  14. Shields, Gail M & Shields, Michael P, 1989. " The Emergence of Migration Theory and a Suggested New Direction," Journal of Economic Surveys, Wiley Blackwell, vol. 3(4), pages 277-304.
  15. George J. Borjas, 1994. "The Economic Benefits from Immigration," NBER Working Papers 4955, National Bureau of Economic Research, Inc.
  16. Potters, Jan & van Winden, Frans, 1992. " Lobbying and Asymmetric Information," Public Choice, Springer, vol. 74(3), pages 269-92, October.
  17. Fujita, Masahisa & Thisse, Jacques-François, 1996. "Economics of Agglomeration," CEPR Discussion Papers 1344, C.E.P.R. Discussion Papers.
  18. Fujita, Masahisa & Tabuchi, Takatoshi, 1997. "Regional growth in postwar Japan," Regional Science and Urban Economics, Elsevier, vol. 27(6), pages 643-670, November.
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  21. Black, Duncan, 1999. "Local Knowledge Spillovers and Inequality," ERSA conference papers ersa99pa409, European Regional Science Association.
  22. Wittman, Donald, 1989. "Why Democracies Produce Efficient Results," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1395-1424, December.
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