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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. Anas, Alex & Arnott, Richard & Small, Kenneth A., 1997. "Urban Spatial Structure," University of California Transportation Center, Working Papers qt835049q3, University of California Transportation Center.
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  17. 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.
  18. G. P. I. Ottaviano, 1997. "Integration, Geography and the Burden of History," Working Papers 283, Dipartimento Scienze Economiche, Universita' di Bologna.
  19. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
  20. Starrett, David, 1978. "Market allocations of location choice in a model with free mobility," Journal of Economic Theory, Elsevier, vol. 17(1), pages 21-37, February.
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