Knife-Edge or Plateau: When Do Market Models Tip?
This paper studies whether agents must agglomerate at a single location in a class of models of two-sided interaction. In these models there is an increasing returns effect that favors agglomeration, but also a crowding or market-impact effect that makes agents prefer to be in a market with fewer agents of their own type. We show that such models do not tip in the way the term is commonly used. Instead, they have a broad plateau of equilibria with two active markets, and tipping occurs only when one market is below a critical size threshold. Our assumptions are fairly weak, and are satisfied in Krugman's model of labor market pooling, a heterogeneous-agent version of Pagano's asset market model, and Ellison, Fudenberg, and MÃ¶bius' model of competing auctions.
|Date of creation:||2003|
|Date of revision:|
|Publication status:||Published in Quarterly Journal of Economics|
|Contact details of provider:|| Postal: |
Web page: http://www.economics.harvard.edu/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn Ellison & Edward L. Glaeser, 1994.
"Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach,"
NBER Working Papers
4840, National Bureau of Economic Research, Inc.
- Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
- Ellison, G. & Glaeser, E.L., 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Working papers 94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
- Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010.
Levine's Working Paper Archive
506439000000000092, David K. Levine.
- Glenn Allison & Drew Fudenberg, 2002. "Competing Auctions," Harvard Institute of Economic Research Working Papers 1960, Harvard - Institute of Economic Research.
- Ellison, Glenn & Fudenberg, Drew & Mobius, Markus, 2010. "Competing Auctions," Staff General Research Papers 32106, Iowa State University, Department of Economics.
- Ellison, Glenn & Mobius, Markus & Fudenberg, Drew, 2004. "Competing Auctions," Scholarly Articles 3043414, Harvard University Department of Economics.
- Klemperer, Paul D & Meyer, Margaret A, 1989. "Supply Function Equilibria in Oligopoly under Uncertainty," Econometrica, Econometric Society, vol. 57(6), pages 1243-77, November.
- Pagano, Marco, 1989.
"Trading Volume and Asset Liquidity,"
The Quarterly Journal of Economics,
MIT Press, vol. 104(2), pages 255-74, May.
- Vayanos, Dimitri, 1999.
"Strategic Trading and Welfare in a Dynamic Market,"
Review of Economic Studies,
Wiley Blackwell, vol. 66(2), pages 219-54, April.
- Henderson, J V, 1974.
"The Sizes and Types of Cities,"
American Economic Review,
American Economic Association, vol. 64(4), pages 640-56, September.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-99, June.
- Guy Dumais & Glenn Ellison & Edward Glaeser, 1997.
"Geographic Concentration as a Dynamic Process,"
NBER Working Papers
6270, National Bureau of Economic Research, Inc.
- Fujita, Masahisa, 1988. "A monopolistic competition model of spatial agglomeration : Differentiated product approach," Regional Science and Urban Economics, Elsevier, vol. 18(1), pages 87-124, February.
- Gehrig, Thomas, 1998. "Competing markets," European Economic Review, Elsevier, vol. 42(2), pages 277-310, February.
- Kyle, Albert S, 1989. "Informed Speculation with Imperfect Competition," Review of Economic Studies, Wiley Blackwell, vol. 56(3), pages 317-55, July.
When requesting a correction, please mention this item's handle: RePEc:hrv:faseco:3160493. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ben Steinberg)
If references are entirely missing, you can add them using this form.