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Agglomeration and Market Interaction


  • Fujita, Masahisa
  • Thisse, Jacques-François


The most salient feature of the spatial economy is the presence of a large variety of economic agglomerations. Our purpose is to review some of the main explanations for this universal phenomenon, as they are proposed in urban economics and modern economic geography. We first show why the competitive framework can hardly be the foundation for the economics of agglomeration. We then briefly review the alternative modelling strategies. In the hope of making our Paper accessible to a broad audience, we present in detail the two (specific) models that have been used so far to study the spatial distribution of economic activities. Several extensions of these models are discussed in the subsequent section. We conclude with some suggestions for further research and policy implications.

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  • Fujita, Masahisa & Thisse, Jacques-François, 2002. "Agglomeration and Market Interaction," CEPR Discussion Papers 3362, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:3362

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    Cited by:

    1. Kristian Behrens, 2003. "International trade and internal geography revisited," Working Papers hal-01526511, HAL.
    2. Alfonso Irarrazabal & Andreas Moxnes & Luca David Opromolla, 2015. "The Tip of the Iceberg: A Quantitative Framework for Estimating Trade Costs," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 777-792, October.
    3. Su, Yaqin & Hua, Yue & Deng, Lanfang, 2021. "Agglomeration of human capital: Evidence from city choice of online job seekers in China," Regional Science and Urban Economics, Elsevier, vol. 91(C).
    4. Richard Baldwin & James Harrigan, 2011. "Zeros, Quality, and Space: Trade Theory and Trade Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 60-88, May.
    5. Timo Autio & Jorge Padilla & Salvatore Piccolo & Pekka Sääskilahti & Lotta Väänänen, 2020. "On the Risk of Using a Firm-Level Approach to Identify Relevant Markets," CSEF Working Papers 581, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    6. Robbiano, Simone, 2021. "The innovative impact of public research institutes: evidence from Italy," MPRA Paper 106386, University Library of Munich, Germany.
    7. Peter Mayerhofer, 2007. "De-Industrialisierung in Wien(?) Zur abnehmenden Bedeutung der Sachgütererzeugung für das Wiener Beschäftigungssystem: Umfang, Gründe, Wirkungsmechanismen," WIFO Studies, WIFO, number 33120, December.
    8. Eric J. Heikkila & Ying Xu, 2022. "Polycentric Urbanization and Sustainable Development in China," Global Policy, London School of Economics and Political Science, vol. 13(S1), pages 69-78, April.
    9. Douglas Silveira & Izak Silva & Silvinha Vasconcelos & Fernando Perobelli, 2020. "The Brexit game: uncertainty and location decision," Papers in Regional Science, Wiley Blackwell, vol. 99(6), pages 1515-1538, December.

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