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The Structure of Simple 'New Economic Geography' Models


  • Robert-Nicoud, Frédéric


This paper shows that the mathematical structure of the most widely used New Economic Geography models is the same, irrespective of the underlying agglomeration mechanism assumed (factor migration, input-output linkages, endogenous capital accumulation). This enables us to provide analytical proofs to three important and related results in the field. First, standard models display at most two interior steady states beyond the symmetric one; we refer to the latter steady state as 'dispersion' because the manufacturing industry is evenly spread across locations. Second, when interior, asymmetric steady-states exist they are unstable. The final result of this paper relates to the corner steady states of the model whereby the manufacturing sector is clustered in a single location; we refer to such a steady states as 'agglomeration'. I establish that both agglomeration and dispersion are stable steady state for some economically meaningful parameter values of the model. This paper also stresses the empirical implications of the most important results derived in this study.

Suggested Citation

  • Robert-Nicoud, Frédéric, 2004. "The Structure of Simple 'New Economic Geography' Models," CEPR Discussion Papers 4326, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4326

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    Cited by:

    1. Murata, Yasusada & Thisse, Jacques-Francois, 2005. "A simple model of economic geography a la Helpman-Tabuchi," Journal of Urban Economics, Elsevier, vol. 58(1), pages 137-155, July.
    2. Sylvain Barde, 2008. "Knowledge spillovers and the equilibrium location of vertically linked industries: the return of the black hole," Documents de Travail de l'OFCE 2008-05, Observatoire Francais des Conjonctures Economiques (OFCE).
    3. Sanguinetti, Pablo & Traistaru, Iulia & Volpe Martincus, Christian, 2004. "Economic integration and location of manufacturing activities: Evidence from MERCOSUR," ZEI Working Papers B 11-2004, University of Bonn, ZEI - Center for European Integration Studies.
    4. Volpe Martincus, Christian & Siedschlag, Iulia, 2010. "The Impact of South-South Preferential Trade Agreements on Industrial Development: An Empirical Test," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 69-104.
    5. Sidorov, Alexander, 2011. "The Impact of Exogenous Asymmetry on Trade and Agglomeration in Core-Periphery Model," MPRA Paper 29627, University Library of Munich, Germany.
    6. Sylvain Barde, 2007. "Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions," Sciences Po publications 07/02, Sciences Po.
    7. repec:wsi:acsxxx:v:10:y:2007:i:01:n:s0219525907000957 is not listed on IDEAS
    8. Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2007. "Adding Geography to the New Economic Geography," CESifo Working Paper Series 2038, CESifo Group Munich.
    9. Volpe Martincus, Christian & Siedschlag, Iulia, 2010. "The Impact of South-South Preferential Trade Agreements on Industrial Development: An Empirical Test," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 69-104.
    10. Alexander V. Sidorov, 2011. "International Trade and Agglomeration in Asymmetric World: Core-Periphery Approach," DEGIT Conference Papers c016_020, DEGIT, Dynamics, Economic Growth, and International Trade.
    11. Frédéric Robert-Nicoud, 2006. "Agglomeration and Trade with Input–Output Linkages and Capital Mobility," Spatial Economic Analysis, Taylor & Francis Journals, vol. 1(1), pages 101-126.
    12. Javier Barbero & José L. Zofío, 2016. "The Multiregional Core-periphery Model: The Role of the Spatial Topology," Networks and Spatial Economics, Springer, vol. 16(2), pages 469-496, June.
    13. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2006. "Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 613-635, September.

    More about this item


    hysteresis; natural state space; new economic geography; number of steady-states; stability;

    JEL classification:

    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • 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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