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Agglomeration patterns in a multi-regional economy without income effects

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  • José M. Gaspar

    () (FEP, University of Porto. Católica Porto Business School, Universidade Católica Portuguesa.)

  • Sofia B.S.D. Castro

    () (CMUP and Faculty of Economics, University of Porto)

  • João Correia-da-Silva

    () (CEF.UP and Faculty of Economics, University of Porto)

Abstract

We study the long-run spatial distribution of industry using a multi-region core-periphery model with quasi-linear log utility (Pflüger, 2004). We show that a distribution in which industry is evenly dispersed among some of the regions while the other regions have no industry cannot be stable. A spatial distribution where industry is evenly distributed among all regions except one can be stable, but only if that region is significantly more industrialized than the other regions. When trade costs decrease, the type of transition from dispersion to agglomeration depends on the fraction of workers that are mobile. If this fraction is low, the transition from dispersion to agglomeration is catastrophic once dispersion becomes unstable. If it is high, there is a discontinuous jump to partial agglomeration in one region and then a smooth transition until full agglomeration. Finally, we find that mobile workers benefit from more agglomerated spatial distributions whereas immobile workers prefer more dispersed distributions. The economy as a whole shows a tendency towards over-agglomeration for intermediate levels of trade costs.

Suggested Citation

  • José M. Gaspar & Sofia B.S.D. Castro & João Correia-da-Silva, 2017. "Agglomeration patterns in a multi-regional economy without income effects," FEP Working Papers 591, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:fepwps:591
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    References listed on IDEAS

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    Cited by:

    1. repec:spr:apjors:v:3:y:2019:i:3:d:10.1007_s41685-019-00139-2 is not listed on IDEAS
    2. NAKAGAWA Mariko, 2018. "Skill Transference and International Migration: A theoretical analysis on skilled migration to the Anglosphere," Discussion papers 18083, Research Institute of Economy, Trade and Industry (RIETI).
    3. José Gaspar & Kiyohiro Ikeda & Mikihasa Onda, 2019. "Global bifurcation mechanism and local stability of identical and equidistant regions," Working Papers de Economia (Economics Working Papers) 04, Católica Porto Business School, Universidade Católica Portuguesa.
    4. repec:spr:anresc:v:61:y:2018:i:2:d:10.1007_s00168-018-0866-5 is not listed on IDEAS
    5. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.

    More about this item

    Keywords

    Core-periphery model; Footloose Entrepreneur; Multiple regions; Welfare;

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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