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First Nature vs. Second Nature Causes: Industry Location and Growth in the Presence of an Open-Access Renewable Resource

  • González-Val, Rafael
  • Pueyo, Fernando

In this paper we present a model integrating characteristics of the New Economic Geography, the theory of endogenous growth and the economy of natural resources. This theoretical framework enables us to study explicitly the effect of “first nature causes” in the concentration of economic activity, more specifically, the consequences of an asymmetrical distribution of natural resources. The natural resource we consider appears as a localized input in one of the two countries, giving firms located in that country a cost advantage. In this context, after a decrease in transport costs, firms decide to move to the country with the greatest domestic demand and market size, where they can take more advantage of increasing returns, despite the cost advantage of locating in the South, due to the presence of the natural resource.

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File URL: https://mpra.ub.uni-muenchen.de/18586/1/MPRA_paper_18586.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 18586.

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Date of creation: 12 Nov 2009
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Handle: RePEc:pra:mprapa:18586
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  1. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  2. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
  3. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Working Papers 0025, University of Washington, Department of Economics.
  4. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-90, October.
  5. Martin, Philippe & I.P. Ottaviano, Gianmarco, 1999. "Growing locations: Industry location in a model of endogenous growth," European Economic Review, Elsevier, vol. 43(2), pages 281-302, February.
  6. Eliasson, Ludvik & Turnovsky, Stephen J., 2004. "Renewable resources in an endogenously growing economy: balanced growth and transitional dynamics," Journal of Environmental Economics and Management, Elsevier, vol. 48(3), pages 1018-1049, November.
  7. Brander, James A. & Scott Taylor, M., 1998. "Open access renewable resources: Trade and trade policy in a two-country model," Journal of International Economics, Elsevier, vol. 44(2), pages 181-209, April.
  8. James A. Brander & M. Scott Taylor, 1997. "International Trade and Open-Access Renewable Resources: The Small Open Economy Case," Canadian Journal of Economics, Canadian Economics Association, vol. 30(3), pages 526-52, August.
  9. Brander, James A. & Scott Taylor, M., 1997. "International trade between consumer and conservationist countries," Resource and Energy Economics, Elsevier, vol. 19(4), pages 267-297, November.
  10. Gardner M. Brown, 2000. "Renewable Natural Resource Management and Use without Markets," Journal of Economic Literature, American Economic Association, vol. 38(4), pages 875-914, December.
  11. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  12. Duncan Black & Vernon Henderson, 2003. "Urban evolution in the USA," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 343-372, October.
  13. Kris James Mitchener & Ian W. McLean, 2001. "The Productivity of U.S. States Since 1880," School of Economics Working Papers 2001-08, University of Adelaide, School of Economics.
  14. Martin, Philippe & Rogers, Carol Ann, 1994. "Industrial Location and Public Infrastructure," CEPR Discussion Papers 909, C.E.P.R. Discussion Papers.
  15. Chichilnisky, Graciela, 1994. "North-South Trade and the Global Environment," American Economic Review, American Economic Association, vol. 84(4), pages 851-74, September.
  16. Kyoko Hirose & Kazuhiro Yamamoto, 2007. "Knowledge spillovers, location of industry, and endogenous growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 41(1), pages 17-30, March.
  17. Gardner Brown, 2000. "Renewable Natural Resource Management and Use Without Markets," Discussion Papers in Economics at the University of Washington 0025, Department of Economics at the University of Washington.
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