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Trade is not necessary for agglomeration to arise

Listed author(s):
  • BEHRENS, Kristian

    ()

    (LATEC - CNRS UMR 5118 - MSH - Université de Bourgogne)

We develop a spatial general equilibrium model in which the absence of trade is an endogenous outcome and we show that trade is not a necessary condition for agglomeration to arise. More precisely, extending the model developed by Ottaviano et al. [13], we show that equilibria without trade differ significantly from those obtained in the presence of trade. Somewhat surprisingly, equilibrium structures without trade are richer than those with trade, since partial agglomeration becomes a feasible outcome. Equilibria now depend on the ratio of mobile to immobile factors and an increase in that ratio triggers a process of spatial agglomeration. / Nous développons un modèle d'équilibre général spatial dans lequel l'absence de commerce est un résultat endogène et nous montrons que le commerce n'est pas une condition nécessaire à l'agglomération. Plus précisément, nous étendons le modèle de Ottaviano et al. [13] et nous montrons que les équilibres sans commerce diffèrent significativement de ceux obtenus avec commerce. Il est surprenant que les structures d'équilibre sans commerce sont plus riches que celles avec, puisque l'agglomération partielle peut se produire. Les équilibres dépendent du ratio de facteurs mobiles et immobiles; un accroissement de ce ratio mène à un processus d'agglomération spatial.

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Paper provided by LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne in its series LEG - Document de travail - Economie with number 2003-07.

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Length: 30 pages
Date of creation: Apr 2003
Handle: RePEc:lat:legeco:2003-07
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  1. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 2002. "Taste heterogeneity, labor mobility and economic geography," Journal of Development Economics, Elsevier, vol. 69(1), pages 155-177, October.
  2. Keith Head & Thierry Mayer, 2000. "Non-Europe: The magnitude and causes of market fragmentation in the EU," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 136(2), pages 284-314, June.
  3. Gianmarco Ottaviano & Takatoshi Tabuchi & Jacques-FranÁois Thisse, 2002. "Agglomeration and Trade Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 409-436, May.
  4. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
  5. Belleflamme, Paul & Picard, Pierre & Thisse, Jacques-Francois, 2000. "An Economic Theory of Regional Clusters," Journal of Urban Economics, Elsevier, vol. 48(1), pages 158-184, July.
  6. J. Vernon Henderson, Zmarak Shalizi, and Anthony J. Venables, 2001. "Geography and development," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 81-105, January.
  7. Ginsburgh, Victor & Papageorgiou, Yorgo & Thisse, Jacques-Francois, 1985. "On existence and stability of spatial equilibria and steady-states," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 149-158, June.
  8. Tabuchi, Takatoshi & Thisse, Jacques-François, 2002. "Regional Specialization and Transport Costs," CEPR Discussion Papers 3542, C.E.P.R. Discussion Papers.
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