We consider a continuous spatial economy consisting of pure exchange local economies. Agents are allowed to change their location over time as a response to spatial utility differentials. These spatial adjustments toward higher utility neighborhoods lead the spatial economy to converge to a spatially uniform allocation of resources, provided that the matrix of price effects is quasi-negative definite. Furthermore our model provides a real time interpretation of the tâtonnement story. Also, spatial fluctuations are shown to be damped at different rates according to their spatial scale.
|Date of creation:||Dec 2004|
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- Pascal Mossay, 2003. "Increasing Returns And Heterogeneity In A Spatial Economy," Working Papers. Serie AD 2003-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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- Costas Megir & Danny Quah, 1996. "Regional Convergence Clusters Across Europe," CEP Discussion Papers dp0274, Centre for Economic Performance, LSE.
- Mossay, Pascal, 2003. "Increasing returns and heterogeneity in a spatial economy," Regional Science and Urban Economics, Elsevier, vol. 33(4), pages 419-444, July.
- Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
- Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
- Sonnenschein, Hugo, 1981. "Price dynamics and the disappearance of short-run profits : An example," Journal of Mathematical Economics, Elsevier, vol. 8(2), pages 201-204, July.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-99, June.
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