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This study revisits the seminal findings by Helpman in 1998 in a more comprehensive setup with Melitz-type firm heterogeneity. Our model features how a change in firm heterogeneity affects agglomeration in an urban-space economy. We contribute to the literature by analytically giving explicit solutions for the threshold values of the housing preference and transport costs that are crucial in determining the equilibrium. We also obtain new findings in the case of asymmetric housing stocks. Our results provide alternative explanations to stylized facts such as "ghost cities" in countries undertaking high-speed urbanization and real estate development. [ABSTRACT FROM AUTHOR]

Este artículo examina la relación entre el potencial de mercado y los salarios de los trabajadores manufactureros en las entidades federativas de México, utilizando un modelo estándar de Nueva Geografía Económica (NGE). En la evaluación se considera un aspecto relevante en países en desarrollo, como lo es la distinción entre trabajadores formales e informales. Las estimaciones arrojan que, en general, la elasticidad del potencial de mercado sobre los salarios es de 0.082, la cual es robusta a diversas medidas relacionadas con las teorías de aglomeración urbana y a problemas de endogeneidad y autocorrelación espacial. También se encuentra que los salarios de los trabajadores informales son menos sensibles a cambios en el potencial de mercado en comparación con los salarios de los empleados formales y se benefician de externalidades generadas por la presencia de firmas extranjeras. Una simulación sugiere que hasta 10.7% de la diferencia salarial entre trabajadores de los estados fronterizos con los Estados Unidos y los localizados en el sur de México, puede atribuirse a la geografía económica; este efecto es menor para los trabajadores informales y para el caso de los formales se duplica.

In this paper, we put forward a four-region new economic geography footloose entrepreneur model in which regions are differentiated by their size and their geographical position along a line. There are two distinct trade blocs, each of them consisting of a pair of regions. Direct and indirect trade between all regions is allowed, whereas factor mobility can occur only between regions of the same bloc. Given this more general geographical structure, as compared to previous studies, we are able to disentangle two manifestations of the market access effect: firms can take advantage of locating both in a more central region (centrality effect) and/or in a bigger region (local market size effect). The model is able to generate a plethora of long-term outcomes, including four equilibria with full agglomeration in each trade bloc that can be ranked by factor owners. Equilibria where industry is dispersed or agglomerated in a bloc and dispersed in the other one, are also possible as well as more complex attractors. Finally, by allowing direct and indirect trade between regions, we are able to look at the effect of trade integration on transit traffic by evaluating in a preliminary analysis the consequences of policies aiming at limiting transport volumes in a model with shifting industry. [ABSTRACT FROM AUTHOR]

In this paper, we study the relationship between informal employment and city structure, in the presence of informal housing. We build an urban search-matching model incorporating informal labor, informal housing, and rural-urban migration. We find that a greater decentralization of informal jobs leads to a higher informality rate in the labor market. This, in turn, pushes the expected income in the city downward and reduces incentives for rural workers to migrate. Surprisingly, rural-urban migration increases. This happens because greater decentralization relaxes the competition for land throughout the city, which reduces urban costs for all urban residents and effectively increases the expected income in the city. [ABSTRACT FROM AUTHOR]

Internal net-migration rates in Russia are negatively correlated with regional labour shares in mining. In order to explain this phenomenon theoretically and empirically, Crozet's (J Econ Geogr 4:439-458, 2004) theoretical model is augmented by the mining of natural resources to allow for exogenous market developments and spatially bounded production. The model is directly transformed into an econometric panel specification and tested for 78 Russian regions for the observation period 2004-2010. The empirical results show that the mining of natural resources attracts internal migrants, while regional price-indexes have unexpected positive effects. [ABSTRACT FROM AUTHOR]

This article empirically analyses the link between market potential and regional wages in the enlarged EU. We contribute to the existing literature in several ways: (1) we analyse the link between market potential and wages for the EU27 and (2) deconstruct total market potential into several geographical components and analyse their respective contributions to explaining the geographical wage structure. We correct for existing spatial autocorrelation and endogeneity by using an instrumental variable generalized spatial two-stage least squares (IV GS2SLS). [ABSTRACT FROM AUTHOR]

Copyright of Spatial Economic Analysis is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Regional Studies is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Anas's impossibility theorem states that monopolistic competition or economies of scale alone are insufficient to explain growth of cities in response to growing population or decreasing trade costs (under constant urban costs); cities shrink. To enhance realism of assumptions, instead of Anas's normative approach, we study stable equilibria in the presence of another sector. Still, 'vanishing' remains robust! Ultimately, we argue that 'vanishing' mechanism looks realistic and can have an explanatory power: industries, free of externalities, should locate in small towns. Moreover, the comparative statics shows how such 'manufacturing' towns gradually decline, whereas other cities do not. [ABSTRACT FROM AUTHOR]

A standard result on international capital income taxation is that applying the residence principle does not affect industrial location and is therefore more efficient than applying the source principle. However, many countries do in fact apply the source principle. We argue that in a new economic geography framework the standard result needs to be qualified: the size of the market is crucial for industry location and it is changed by taxation and by public expenditures; we show that - for the high tax region - this effect dampens capital losses under the source principle and causes them under the residence principle. The sharp difference between the two taxation principles blurs and, unsurprisingly, both principles are found in taxation laws. [ABSTRACT FROM AUTHOR]

Departing from the exogenous treatment of transport costs, this study examines endogenous transport costs and their impact on firm location in new trade theory. Previous studies argue that, if exogenous transport costs in a large country are sufficiently higher than in a small country, then the home market effect disappears. In our model, national governments control domestic transport costs via public infrastructure investment. Our study presents persuasive findings that a large country always collects more tax revenue for public investment than a small country, which results in lower domestic transport costs, and hence, the home market effect always prevails. [ABSTRACT FROM AUTHOR]

This paper examines how market-access strategies, via exports and FDI, respond to changes in the level of integration. Empirical evidence shows that both firm exports and multinational activity are affected by trade liberalization episodes. We account for the strong positive correlation between exports and FDI by developing a general-equilibrium model featuring firm heterogeneity, trade and FDI with final and intermediate products. Different geographical spaces are considered to quantify the effect of a preferential trade agreement ( PTA) on supply-mode decisions, for both partner and excluded countries. The model sheds new light on the mechanisms through which geography reshapes the concentration of economic activities both inside and outside the PTA area. [ABSTRACT FROM AUTHOR]

Bearing in mind that developing countries have less capital and less advanced technologies, this paper theoretically investigates the joint impact of two first-nature forces, Ricardian and Heckscher- Ohlin advantages and the second-nature force on spatial income inequality. We establish a new economic geography model without a traditional sector so that the wages are not equalized. By combining these three kinds of trade forces, we show how spatial income inequality changes with economic integration. Four evolution patterns are obtained which are consistent with diverse empirical results in the literature. [ABSTRACT FROM AUTHOR]

Highlights: [•] We use core–periphery models in which workers migrate among multiple places. [•] Self-organization of 2D agglomeration patterns from the uniformly distributed state. [•] We found hexagonal population distributions envisaged by central place theory. [•] 2D patterns show an insufficiency of conventional one-dimensional racetrack economy. [ABSTRACT FROM AUTHOR]

This paper constructs a footloose entrepreneur model with Diamond-Mortensen-Pissarides job search and matching frictions in the manufacturing sector. It captures unemployment adjustment both within the manufacturing sector and in the regional labor market. The within-sector unemployment rate is negatively affected by firm market access and is positively related to the intensity of firm screening among heterogeneous candidate workers. The regional unemployment rate, on the other hand, is related to the sectoral share of job searching across sectors within each region. We find the coexistence of a smaller within-sector unemployment rate and a larger local unemployment rate in the region with firm agglomeration. We also extend the analysis by examining the role of labor market frictions across sectors and the interdependence between agglomeration and unemployment. [ABSTRACT FROM AUTHOR]

Copyright of Spatial Economic Analysis is the property of Routledge and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We examine how the spatial economy with multiple industries is shaped when interregional trade costs and intraregional commuting costs are low. All industries are characterized by increasing returns to scale and monopolistic competition, and they are differentiated by their trade costs and the degree of intra-industry competition measured by their firm numbers. We find some distinct rules in industrial location. First, at most, one industry disperses, while others agglomerate in a region according to their ratios of relative trade costs to firm numbers. Second, industries with stronger competition constitute a smaller region, while those with higher trade costs compose a larger region. The results are consistent with the classical Weberian location theory and suggest that the degree of intra-industry competition also becomes an essential factor to determine industrial location when transportation costs are small. Finally, the population differential between the regions monotonically decreases in the relative commuting cost. [ABSTRACT FROM AUTHOR]

This article provides a theoretical synthesis of the New Economic Geography to analyse the links between trade, FDI and migrations. We find that liberalizing from high trade costs, a country can attract both capital and labour – the bifurcation pattern is a gradual peripheral exodus of workers associated with capital flight from the periphery – but after a threshold of trade costs, opening trade generates return migration toward the periphery while capital remains agglomerated in the core. The model is built on the assumption that factors are sector specific. By relaxing this assumption and by providing a second model where workers are mobile between industries (vertically linked) but also between countries we confirm this result. [ABSTRACT FROM PUBLISHER]

This paper develops a general equilibrium geographical economics model, which uses matching frictions on the labor market to generate regional unemployment disparities alongside the usual core-periphery pattern of industrial agglomeration. In the model, regional wage differentials do not only influence migration decisions of mobile workers, but also affect the bargaining process on local labor markets, leading to differences in vacancies and unemployment as well. In a setting with two regions, both higher or lower unemployment rates in the core region are possible equilibrium outcomes, depending on transport costs and the elasticity of substitution. Stylized facts suggest that both patterns are of empirical relevance. [ABSTRACT FROM AUTHOR]

We qualitatively match new economic geography (NEG) to stylized facts on German economic integration after 1989. We find that NEG may explain German integration reasonably well. Germany may currently be close to the peak of the bell curve, which describes the long-run relationship between integration and agglomeration in Germany. As a consequence, further economic integration between the two parts of Germany may eventually foster redispersion of economic activity toward East Germany. We also identify limitations of NEG for explaining German integration, most notably the analytical complexity of multi-region models and its neglect of knowledge spillovers and labour pooling. RÉSUMÉ Nous établissons une correspondance qualitative entre la nouvelle géographie économique (NEG) et des faits stylisés sur l'intégration économique allemande après 1989. Nous découvrons que la NEG permet d'expliquer raisonnablement bien l'intégration allemande. En fait, l'Allemagne est sans doute proche du sommet de la courbe en cloche, décrivant les rapports de longue durée entre l'intégration et l'agglomération en Allemagne. Donc, la poursuite de l'intégration économique entre les deux parties de l'Allemagne pourra favoriser une re-dispersion de l'activité économique envers l'Allemagne de l'Est. Néantmoins, nous identifions des limitations de la MEG pour expliquer l'intégration allemande, notamment la complexité analytique des modèles multirégionaux et la négligeance des retombées des connaissances (knowledge spillovers) et le groupement de la main-d'œuvre. ExtractoEmparejamos cualitativamente la Nueva Geografía Económica (NEG) con hechos estilizados de la integración económica alemana después de 1989. Descubrimos que la NEG puede explicar la integración alemana razonablemente bien. Actualmente, Alemania podría estar cerca de la cumbre de la curva de campana que describe la asociación a largo plazo entre integración y aglomeración en Alemania. En consecuencia, una mayor integración económica entre las dos partes de Alemania podría fomentar últimamente la re-dispersión de actividad económica hacia la Alemania del Este. Además identificamos limitaciones de la NEG para explicar la integración alemana, consistiendo principalmente en la complejidad analítica de los modelos multirregionales y en su preterición de los desbordamientos de conocimiento (knowledge spillovers) y de la concentración de mano de obra cualificada (labour pooling). 摘要:我们将新经济地理(NEG)和1989年德国经济统一后的典型事实进行定性比较。我们发现NEG可以很好地解释德国统一。德国现在非常接近钟形曲线的峰值, 意味着德国经济会长期呈现融合和聚集并存。因此, 东西德之间进一步的经济融合将最终促进经济活动流向东德。我们还找出了用NEG解释德国统一的局限性，尤其是多区域模型分析的复杂性以及对人才流失和劳动力储备的忽略。 [ABSTRACT FROM AUTHOR]

This paper shows the equivalence of spatial inequalities in industrial location and in income by revisiting the home market effect (HME) without any homogeneous good based on a reconstructed footloose capital model. In this simple framework, spatial inequalities in industrial location and in income are the HMEs in terms of firm share and wage, respectively. We show that the larger country has a more-than-proportionate share of firms and a higher wage. Furthermore, both the wage differential and the industrial location in the larger country evolve in an inverted U-pattern when transport costs decline. Finally, we analytically examine the effects of trade liberalization on the welfare and show that both countries may gain from globalization. [ABSTRACT FROM AUTHOR]

We develop an economic geography model where mobile skilled workers choose to either work in a production sector or to become part of an unproductive elite. The elite sets income tax rates to maximize its own welfare by extracting rents, thereby influencing the spatial structure of the economy and changing the available range of consumption goods. We show that either unskilled labour mobility, or rent-seeking behaviour, or both, are likely to favour the occurence of agglomeration and of urban primacy. In equilibrium, the elite may tax the unskilled workers but does not tax the skilled workers, and there are rural-urban transfers towards the agglomeration. The size of the elite and the magnitude of the tax burden that falls on the unskilled decrease with product differentiation and with the expenditure share for manufacturing goods. All these results are broadly in line with observed patterns of urban primacy and economic development in Sub-Saharan African countries. [ABSTRACT FROM AUTHOR]

In a two-country four-region setting, this paper analyzes the impact of trade infrastructure on firm locations when they interact weakly in Cournot competition, and capital is perfectly footloose. Trade infrastructure costs are additive in firm production and countries differ in their quality of domestic infrastructure. We show that there is a magnified impact of initial infrastructure difference on firm location choices whenever the market is more integrated internationally or within each country. Trade liberalization promotes regional dispersion in the country with better infrastructure. For the country with poor infrastructure, given the presence of a magnified infrastructure disadvantage, unilateral domestic market integration does not necessarily result in an inflow of firms. [ABSTRACT FROM AUTHOR]

We extend an analytically solvable core-periphery model by introducing a monopolistically competitive sector of non-tradable goods that is mobile across regions. We find that when the elasticity of substitution among non-tradable goods is very low, there is agglomeration of all the production (of both tradable and non-tradable goods). When the elasticity of substitution among non-tradable goods is sufficiently high ('no black-hole' condition), then there is symmetric dispersion of all the production, if trade costs are high; or full agglomeration of the production of tradable goods with partial agglomeration of the production of non-tradable goods, if trade costs are low. [ABSTRACT FROM AUTHOR]

We replace monopolistic competition with national oligopolies in a model of 'new economic geography'. There are many possible bifurcation diagrams, but unlike in monopolistic competition, the symmetric equilibrium is always stable for low trade costs. The antitrust policy, though identical in both countries, affects the geographical distribution of firms. In turn, migration attenuates the effectiveness of the antitrust policy in eliminating collusive behavior. For high trade costs, a toughening of the antitrust policy is likely to result in more agglomeration and may reduce world welfare. The antitrust policy is more likely to be welfare improving when market integration progresses. [ABSTRACT FROM AUTHOR]

It is shown that negative consumption of agricultural goods can occur in the literature using the quasi-linear logarithmic NEG model initially developed in Pflüger (Reg. Sci. Urban Econ. 34:565-573, ). This is because the positive consumption condition stated in the original framework is not implemented. Satisfying this condition requires a constraint on the relative size of two of the core model parameters. Importantly, this is found to modify the agglomeration behaviour of the model which affects the results of the original framework and those of ensuing contributions. [ABSTRACT FROM AUTHOR]

Abstract: The present paper studies labour migration in the enlarged EU. Adopting the Krugman’s framework of the New Economic Geography, we are able to study both the determinants of labour migration, such as market potential, wages, cost of living on one hand, and labour migration on the other hand simultaneously, which allows us to address important issues facing the traditional reduced form studies. Our empirical findings suggest that European integration would trigger labour migration between and within the Member States of the enlarged EU. Given that in our framework migrants are attracted by market potential, but they also affect market potential, the emergence of a core-periphery pattern through labour migration not very likely in the enlarged EU. [ABSTRACT FROM AUTHOR]

We study the impact of public good spillovers on tax competition between two imperfectly integrated countries with different levels of productivity. We show that international public good spillovers, by reducing the tax gap between countries, strengthen the agglomeration of firms in the most productive country. Then we carry on a welfare analysis. We first assume that governments are engaged in a redistributive tax policy. At the non-cooperative equilibrium, the tax level in the high-productivity country is inefficiently high while it is inefficiently low in the other country. A different conclusion emerges when tax revenues are recycled in a public good provision: taxes are inefficiently low in both countries and public good spillovers increase the global welfare. Finally, for a given amount of total tax revenues, public good provision in the high-productivity country is inefficiently high compared to its level in the low-productivity country. [ABSTRACT FROM AUTHOR]

This paper develops an analytically solvable new economic geography model in which not only skilled, self-employed labour is mobile, but also the unskilled labour force. Unskilled labour mobility increases the agglomeration incentive of skilled labour and influences the pattern of agglomeration. At high levels of trade costs, skilled and unskilled labour migration reinforce each other leading to agglomeration of both types of labour in the same region. For lower levels of trade costs, unskilled labour remigrates, whereas skilled labour remains concentrated. [ABSTRACT FROM AUTHOR]

Trade costs are a crucial element of New Economic Geography (NEG) models. Without trade costs there is no role for geography. In empirical NEG studies the unavailability of direct trade cost data calls for the need to approximate these trade costs by introducing a trade cost function. In doing so, hardly any attention is paid to the (implicit) assumptions and empirical consequences of the particular trade cost function used. Based on a meta-analysis of NEG market access studies as well as on the results of estimating the NEG wage equation for a uniform sample while using different trade costs functions, we show that the relevance of the key NEG variable, market access, depends nontrivially on the choice of trade cost function. Next, we propose an alternative way to approximate trade costs that does not require the specification of a trade cost function, the so called implied trade costs approach. Overall, our results stress that the specification of trade costs can matter a lot for the conclusions reached in any empirical NEG study. We therefore call for a much more careful treatment of trade costs in future empirical NEG studies. [ABSTRACT FROM AUTHOR]

Transportation costs are of central importance in the New Economic Geography literature, though assumptions about transportation costs continue to be simplistic. This paper begins to address these simplifications by assuming that transportation costs for manufactured goods are heterogeneous. Basic results are consistent with standard models showing dispersion of economic activity for high transport costs and eventual agglomeration as transport costs decline. However, several novel features arise too. Many unstable, dispersed equilibria exist for high average transport costs, but converge to a stable equilibrium path as transport costs decrease. Equilibrium paths smoothly transition from dispersion to agglomeration and do so at an increasing rate. Additionally, transport costs directly influence firms' location decisions and firms spatially sort by transport cost. [ABSTRACT FROM AUTHOR]

This paper presents a new economic geography model with distortionary taxation and endogenized trade costs. Tax revenues finance a public good, infrastructure. We show that the introduction of costly public investment in infrastructure increases agglomerative tendencies. With respect to the regions' sizes, in the periphery, the price index for manufacturing goods decreases, whereas for the core, the price index is rather high since the distortionary effect of taxes dominates. ‘Free riding’– or, in terms of regional policy, externally funded infrastructure investment – is beneficial for the periphery, which can devote all its tax revenue to local demand support, generating a positive home market effect and driving the catch up process. [ABSTRACT FROM AUTHOR]

This paper presents a review of the evolution of spatial economics over the past two centuries. The focus is on the evolution of what I consider to be the most fundamental theory of spatial economics, i.e., general location theory. The paper starts with a review of Thünen (1826 ), and ends with a review of the New Economic Geography initiated by Paul Krugman in the early 1990s. It is shown that the study of general location theory has been successful at shedding light on many important features of actual spatial economies. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of the shape of transport costs on the structure of spatial equilibria. We consider a racetrack economic model in which firms and workers freely locate on the continuous space of a circumference. We present “reasonably” weak conditions on the shape of transport costs under which continuous distributions of firms and workers are never stable equilibria. We also characterize conditions on the shape of transport costs under which discrete distributions are stable equilibria. The results confirm the idea that agglomeration of firms and workers in few cities is a natural outcome of economic interactions. [ABSTRACT FROM AUTHOR]

This paper reviews Paul Krugman's fundamental contributions to new trade theory (NTT) and new economic geography (NEG) on the occasion of his 2008 Nobel Prize. We appraise the impact his work had on the field of regional science broadly defined, and we quantify its influence on papers published in Papers in Regional Science ( PIRS) between 1991 and 2009 (vols. 70–87 and papers in press). We then discuss in more detail a few contributions published in PIRS that extend his original analysis in various directions. Finally, we briefly speculate on where NEG is headed to and which are the research directions that should be explored more thoroughly in the future. Resumen Con ocasión de su Premio Nobel de 2008, este artículo revisa las contribuciones fundamentales de Paul Krugman a la nueva teoría del comercio (NTT, por sus siglas en inglés) y a la Nueva Geografía Económica (NEG, por sus siglas en inglés). Valoramos el impacto que ha tenido su trabajo en el campo de la Ciencia Regional en su más amplia definición, y cuantificamos su influencia sobre artículos publicados en Papers in Regional Science (PiRS) entre 1991 y 2009 (vols. 70-87 y artículos en prensa). A continuación discutimos en más detalle unas pocas contribuciones publicadas en PiRS que amplían su análisis original en varias direcciones. Finalmente, especulamos brevemente sobre adónde se dirige la NEG y cuales son las avenidas de investigación que deberían ser exploradas en mayor profundidad en el futuro. [ABSTRACT FROM AUTHOR]

We generalize the model of Krugman (J Polit Econ 99(3):483–499, ) to allow for asymmetric trade costs between regions and for (asymmetric) trade costs that are internal to the regions. We find that industrial activity, in a region, is enhanced by higher costs of importing and lower costs of exporting (more precisely, by a higher ratio between the two trade costs). This suggests that countries may impose tariffs on imported goods and seek to remove the import tariffs in other countries (unilateral protectionism) in order to foster industrial activity. Industrial activity is also promoted by lower domestic internal trade costs and higher foreign internal trade costs (more precisely, by a lower ratio between the two trade costs). [ABSTRACT FROM AUTHOR]