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Agglomeration in a Core-Periphery Model with Vertically and Horizontally Integrated Firms


  • Ekholm, Karolina
  • Forslid, Rikard


This paper analyses the effect of allowing for a more general production structure in the core-periphery (CP) model. Two special cases of fully horizontally- and vertically-integrated firms are treated. The case of horizontally-integrated firms is a counter-example to the strong agglomeration effects found in the CP model. A symmetric equilibrium will always be stable and hence agglomeration is prevented. The introduction of vertically-integrated firms that can separate the location of headquarter activities from the location of production, has two effects. First, it tends to break the symmetry of the original CP model and thus lead to more agglomeration. Second, it also tends to decrease the parameter space in which full agglomeration occurs, and therefore leads to less agglomeration.

Suggested Citation

  • Ekholm, Karolina & Forslid, Rikard, 1997. "Agglomeration in a Core-Periphery Model with Vertically and Horizontally Integrated Firms," CEPR Discussion Papers 1607, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1607

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    Cited by:

    1. Néstor Duch Brown, 2007. "The empirics of spatial competition: evidence from european regions," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2007(1), pages 35-60.
    2. José Pedro Pontes, 2001. "Location of foreign direct investment in a regional integration area," Economics Bulletin, AccessEcon, vol. 18(5), pages 1-9.
    3. Marano, Angelo, 2000. "Beyond The London-Frankfurt Dichothomy. What Space For The Other European Financial Centers?," ERSA conference papers ersa00p407, European Regional Science Association.

    More about this item


    Agglomeration; Economic Geography; Horizontally Integrated Firms; Vertically Integrated Firms;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • 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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