Scale Economies, Unemployment, and Industry Agglomeration
This paper tries to resolve the paradox raised by Corden and Findlay (1975). In this paper, it is assumed that Manufacture sector has scale economies. Both factor prices and product prices can adjust in a general equilibrium system. In a closed economy, this paper concludes that, with the expansion of capital stock both the unemployment rate and the absolute amount of unemployment will decrease. In an open economy, this paper sets up an asymmetric model, of which only one region has fixed wage rate. It will help us to investigate how the trading cost would affect the unemployment and output of the region, which may give some helpful policy implications.
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- Ottaviano, Gianmarco, 1996.
"Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations,"
CEPR Discussion Papers
1327, C.E.P.R. Discussion Papers.
- Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
- G. Ottaviano, 1996. "Monopolistic Competition, Trade and Endogenous Spatial Fluctuations," Working Papers 240, Dipartimento Scienze Economiche, Universita' di Bologna.
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