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Agglomeration in a global economy: a survey

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  • Gianmarco I. P. Ottaviano
  • Diego Puga

Abstract

This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs, the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. However, agglomeration raises the price of immobile local factors and goods, so far low transport costs firms may spread to regions where those prices are lower.

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File URL: http://eprints.lse.ac.uk/20324/
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 20324.

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Length: 33 pages
Date of creation: Aug 1997
Date of revision:
Handle: RePEc:ehl:lserod:20324
Contact details of provider: Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/
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Keywords: economic geography; location; agglomeration; integration; migration; linkages;

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  • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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Cited by:

  1. Frances Ruane & Anne Marie Gleeson & Julie Sutherland, 2005. "Promoting Industrial Clusters: Evidence from Ireland," The Institute for International Integration Studies Discussion Paper Series iiisdp89, IIIS.
  2. PEETERS, Dominique & THISSE, Jacques-François & THOMAS, Isabelle, . "Transportation networks and the location of human activities," CORE Discussion Papers RP -1344, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Hanson, Gordon H, 1998. "North American Economic Integration and Industry Location," Oxford Review of Economic Policy, Oxford University Press, vol. 14(2), pages 30-44, Summer.
  4. Wolfgang Keller & Ben Li & Carol H Shiue, 2013. "Shanghai's Trade, China's Growth: Continuity, Recovery, and Change since the Opium Wars," IMF Economic Review, Palgrave Macmillan, vol. 61(2), pages 336-378, June.
  5. Overman, Henry G & Redding, Stephen J. & Venables, Anthony J, 2001. "The Economic Geography of Trade Production and Income: A Survey of Empirics," CEPR Discussion Papers 2978, C.E.P.R. Discussion Papers.
  6. Gordon H. Hanson, 1998. "Market Potential, Increasing Returns, and Geographic Concentration," NBER Working Papers 6429, National Bureau of Economic Research, Inc.

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