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Towards a Unifying Approach of the 'New Economic Geography'

Author

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  • Pflüger, Michael P.

    (University of Würzburg)

  • Suedekum, Jens

    (Heinrich Heine University Düsseldorf)

Abstract

Models of the new economic geography share a number of common conclusions, but also exhibit notable differences, in particular with respect to the shape of the location pattern and the efficiency of the market equilibrium. This reflects the fact that these models rely heavily on specific functional forms. In this paper we approach the properties of the 'footloose entrepreneur' class of new economic geography models with a unifying framework based on the indirect utility function of mobile agents. This approach has several payoffs. We are able to provide general, yet handy, formulae to determine the break point, the bifurcation pattern and the welfare properties of the market equilibrium. Moreover, an application of this framework allows us to show how specific results in the literature can be reconciled as special cases, thereby allowing us to highlight the origin of their differences.

Suggested Citation

  • Pflüger, Michael P. & Suedekum, Jens, 2006. "Towards a Unifying Approach of the 'New Economic Geography'," IZA Discussion Papers 2256, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2256
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    References listed on IDEAS

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    1. Ottaviano, Gianmarco I. P. & Thisse, Jacques-Francois, 2002. "Integration, agglomeration and the political economics of factor mobility," Journal of Public Economics, Elsevier, vol. 83(3), pages 429-456, March.
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    5. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-François Thisse, 2021. "Agglomeration And Trade Revisited," World Scientific Book Chapters, in: Firms and Workers in a Globalized World Larger Markets, Tougher Competition, chapter 3, pages 59-85, World Scientific Publishing Co. Pte. Ltd..
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608, Elsevier.
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    More about this item

    Keywords

    agglomeration; location pattern; new economic geography; regional policy;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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