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Agglomeration patterns in a multi-regional economy without income effects

Author

Listed:
  • 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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    2. Kato, Hayato & Okubo, Toshihiro, 2018. "Market size in globalization," Journal of International Economics, Elsevier, vol. 111(C), pages 34-60.
    3. Minoru Tabata & Nobuoki Eshima, 2023. "Approximation of a Continuous Core-periphery Model by Core-periphery Models with a Large Number of Small Regions," Networks and Spatial Economics, Springer, vol. 23(1), pages 223-283, March.
    4. Jyh-Fa Tsai, 2019. "Tax competition with spillover public goods in a median location model," Asia-Pacific Journal of Regional Science, Springer, vol. 3(3), pages 831-862, October.
    5. 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).
    6. Karavidas Dionysios, 2020. "Market Access and Home Market Effect," Open Economics, De Gruyter, vol. 3(1), pages 42-49, January.
    7. Sofia B. S. D. Castro & João Correia-da-Silva & José M. Gaspar, 2022. "Economic geography meets Hotelling: the home-sweet-home effect," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 183-209, February.
    8. Aizawa, Hiroki & Ikeda, Kiyohiro & Osawa, Minoru & José M, Gasper, 2019. "Break and sustain bifurcations of S_N-invariant equidistant economy," MPRA Paper 97654, University Library of Munich, Germany.
    9. 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.
    10. 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.
    11. Gaspar, José M. & Ikeda, Kiyohiro & Onda, Mikihasa, 2021. "Global bifurcation mechanism and local stability of identical and equidistant regions: Application to three regions and more," Regional Science and Urban Economics, Elsevier, vol. 86(C).
    12. Ohtake, Kensuke, 2023. "Agglomeration and welfare of the Krugman model in a continuous space," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 137-142.
    13. Kensuke Ohtake, 2023. "A Continuous Space Model of New Economic Geography with a Quasi-Linear Log Utility Function," Networks and Spatial Economics, Springer, vol. 23(4), pages 905-930, December.
    14. Hiroki Aizawa & Kiyohiro Ikeda & Yosuke Kogure, 2023. "Satellite City Formation for a Spatial Economic Model," Networks and Spatial Economics, Springer, vol. 23(3), pages 529-558, September.
    15. Okubo, Toshihiro & Watabe, Yuta, 2023. "Networked FDI and third-country intra-firm trade," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 591-606.
    16. Karavidas Dionysios, 2020. "Market Access and Home Market Effect," Open Economics, De Gruyter, vol. 3(1), pages 42-49, January.

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    More about this item

    Keywords

    Core-periphery model; Footloose Entrepreneur; Multiple regions; Welfare;
    All these keywords.

    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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