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Self-Defeating Regional Concentration

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  • Kiminori Matsuyama
  • Takaaki Takahashi

Abstract

We present a two-region economy model, in which inefficienct concentration may occur. Individuals in this economy, even though they prefer evenly distributed across the two regions, concentrate into one region in their pursuit of better life. We characterize the conditions for such self-defeating concentration. What is crucial is the coordination failure between the entry decision of service firms and the migration decision of individuals, generated by the incompleteness of markets, or the lack of opportunity to signal demand and supply for potential services. The argument does not rely on price distortions, congestion externalities, or myopia in migration decisions.

Suggested Citation

  • Kiminori Matsuyama & Takaaki Takahashi, 1993. "Self-Defeating Regional Concentration," Discussion Papers 1086, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  • Handle: RePEc:nwu:cmsems:1086
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    References listed on IDEAS

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    Cited by:

    1. Yannis M. Ioannides & George Petrakos, 2000. "Regional Disparities in Greece and the Performance of Crete, Peloponnese and Thessaly," Discussion Papers Series, Department of Economics, Tufts University 0008, Department of Economics, Tufts University.
    2. Soltwedel, Rüdiger & Krieger-Boden, Christiane, 2007. "The impact of European integration and enlargement on regional structural change and cohesion: EURECO. Final report," Open Access Publications from Kiel Institute for the World Economy 4243, Kiel Institute for the World Economy (IfW).
    3. Takahashi, Takaaki, 2003. "International trade and inefficiency in the location of production," Journal of the Japanese and International Economies, Elsevier, pages 134-152.
    4. Hanson, Gordon H., 1998. "Regional adjustment to trade liberalization," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 419-444, July.
    5. repec:spo:wpecon:info:hdl:2441/9328 is not listed on IDEAS
    6. Thomas Brenner, Niels Weigelt, -DISCUSSANT: Gianfranco Guilioni, 2000. "The Evolution Of Industrial Clusters- Simulating Spatial Dynamics," Computing in Economics and Finance 2000 284, Society for Computational Economics.
    7. Anna Agliari & Pasquale Commendatore & Ilaria Foroni & Ingrid Kubin, 2011. "Border Collision Bifurcations in a Footloose Capital Model with First Nature Firms," Computational Economics, Springer;Society for Computational Economics, vol. 38(3), pages 349-366, October.
    8. Philippe Martin, 2000. "The Role of Public Policy in the Process of Regional Convergence," Post-Print hal-01011336, HAL.
    9. Nicholas Sheard, 2012. "Regional policy in a multiregional setting: when the poorest are hurt by subsidies," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), pages 403-423.
    10. Kiminori Matsuyama, 2006. "The 2005 Lawrence R. Klein Lecture: Emergent Class Structure," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 47(2), pages 327-360, May.
    11. repec:spr:joevec:v:27:y:2017:i:5:d:10.1007_s00191-017-0540-6 is not listed on IDEAS
    12. Thomas Doring & Jan Schnellenbach, 2006. "What do we know about geographical knowledge spillovers and regional growth?: A survey of the literature," Regional Studies, Taylor & Francis Journals, pages 375-395.
    13. Döring, Thomas, 2005. "Räumliche Externalitäten von Wissen und ihre Konsequenzen für die Ausgestaltung des Finanzausgleichs," Forschungs- und Sitzungsberichte der ARL: Aufsätze,in: Das föderative System in Deutschland: Bestandsaufnahme, Reformbedarf und Handlungsempfehlungen aus raumwissenschaftlicher Sicht, pages 93-120 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
    14. Takahashi, Takaaki, 1998. "On the optimal policy of infrastructure provision across regions," Regional Science and Urban Economics, Elsevier, vol. 28(2), pages 213-235, March.
    15. Toru Kikuchi, 2010. "The Dixit-Stiglitz-Krugman Trade Model: A Geometric Note," Discussion Papers 1006, Graduate School of Economics, Kobe University.
    16. Norbert Berthold & Michael Neumann, 2005. "Zahlt Deutschland drauf? - Was die Neue Ökonomische Geographie der deutschen Politik für die Verhandlungen um den europäischen Etat mit auf den Weg geben kann," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 58(10), pages 16-22, May.
    17. Philippe Martin, 2000. "The Role of Public Policy in the Process of Regional Convergence," Sciences Po publications info:hdl:2441/9328, Sciences Po.
    18. Harhoff, Dietmar, 1995. "Firm formation and regional spillovers: evidence from Germany," ZEW Discussion Papers 95-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    19. Dietmar Harhoff, 1999. "Firm Formation And Regional Spillovers - Evidence From Germany," Economics of Innovation and New Technology, Taylor & Francis Journals, pages 27-55.
    20. Haaparanta, Pertti, 1998. "Regional concentration, trade, and welfare," Regional Science and Urban Economics, Elsevier, vol. 28(4), pages 445-463, July.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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