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Governmental activity, integration, and agglomeration

Author

Listed:
  • Ingrid Ott

    (Institute of Economics, Leuphana University of Lüneburg)

  • Susanne Soretz

    (Department Growth and Distribution, University of Hannover)

Abstract

This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region's public input, e.g. the extent to which regional road networks are connected. Both, integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced intergation, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomerartion, thereby increasing equilibrium concentraion. Due to the congestion externalities, the market outcome ends up in subotimally high concentration.

Suggested Citation

  • Ingrid Ott & Susanne Soretz, 2006. "Governmental activity, integration, and agglomeration," Working Paper Series in Economics 57, University of Lüneburg, Institute of Economics.
  • Handle: RePEc:lue:wpaper:57
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    References listed on IDEAS

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    Cited by:

    1. Harald Zschiedrich, 2008. "EU-Regionalpolitik im Spagat zwischen Wachstums- und Ausgleichszielen," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 34(4), pages 509-533.
    2. Boll, Christina, 2010. "Mind the gap!: The amount of German mothers' care bill and its game theoretical issues," HWWI Research Papers 1-29, Hamburg Institute of International Economics (HWWI).
    3. Gupta, Manash Ranjan & Barman, Trishita Ray, 2009. "Fiscal policies, environmental pollution and economic growth," Economic Modelling, Elsevier, vol. 26(5), pages 1018-1028, September.
    4. Trishita Ray Barman & Manash Ranjan Gupta, 2010. "Public Expenditure, Environment, and Economic Growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(6), pages 1109-1134, December.

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    More about this item

    Keywords

    public inputs; agglomeration; integration;
    All these keywords.

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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