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Modeling services sectors' agglomeration within a new economic geography model


  • Krenz, Astrid


This study investigates whether services sectors' agglomeration can be explained within a common New Economic Geography model by Krugman and Venables (1996). Special feature of this modeling is to account for the lower importance of intermediate goods received for the services sector, a fact that has been shown in Empirics for the European Union (Krenz (2010)). The results show different strengths of agglomeration for both the industrial and services sector depending on initial values of strength of intra-sectoral and inter-sectoral inputs, consumers' preferences, scale economies and transport costs. The lower extent of services sectors' agglomeration seen in Empirics can be explained within the model.

Suggested Citation

  • Krenz, Astrid, 2012. "Modeling services sectors' agglomeration within a new economic geography model," Center for European, Governance and Economic Development Research Discussion Papers 147, University of Goettingen, Department of Economics.
  • Handle: RePEc:zbw:cegedp:147

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    References listed on IDEAS

    1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
    2. Sascha Frohwerk, 2008. "Das Cluster-Modell bei sektoral unterschiedlichen Transportkosten," Volkswirtschaftliche Diskussionsbeiträge 97, Universität Potsdam, Wirtschafts- und Sozialwissenschaftliche Fakultät.
    3. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    4. repec:hhs:iuiwop:430 is not listed on IDEAS
    5. Krenz, Astrid, 2010. "Services sectors' agglomeration and its interdependence with industrial agglomeration in the European Union," Center for European, Governance and Economic Development Research Discussion Papers 107, University of Goettingen, Department of Economics.
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    More about this item


    agglomeration; services; New Economic Geography;

    JEL classification:

    • L80 - Industrial Organization - - Industry Studies: Services - - - 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)


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