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Economics of Agglomeration: Cities, Industrial Location, and Globalization
Abstract
Economic activities are not concentrated on the head of a pin, nor are they spread evenly over a featureless plane. On the contrary, they are distributed very unequally across locations, regions, and countries. Even though economic activities are, to some extent, spatially concentrated because of natural features, economic mechanisms that rely on the trade-off between various forms of increasing returns and different types of mobility costs are more fundamental. This book is a study of the economic reasons for the existence of a large variety of agglomerations arising from the global to the local. This second edition combines a comprehensive analysis of the fundamentals of spatial economics and an in-depth discussion of the most recent theoretical developments in new economic geography and urban economics. It aims to highlight several of the major economic trends observed in modern societies.
... В XX в. исследования агломерационных эффектов стали полноценной частью экономической науки. Появилось множество работ, в которых оценивалось влияние разных проявлений агломерационной экономии на те или иные экономические показатели в развитых странах с капиталистической экономикой (Fujita and Thisse, 2013). В последние десятилетия круг стран расширился за счет появления работ по КНР, странам Восточной Европы и другим странам за пределами Европы и Северной Америки (Гордеев, Магомедов и Михайлова, 2017;Guo, He and Li, 2016;Lee, Jang and Hong, 2010). ...
... Эффект масштаба и выгоды от разнообразия не исключают, а взаимодополняют друг друга, выполняя роль драйверов роста агломераций (Fujita and Thisse, 2013). Если бы действовала только агломерация локализации, то существовало бы лишь множество равноразмерных городов, специализирующихся на выпуске разных продуктов. ...
The article is dedicated to assessing the impact of agglomeration effects on various sectors of the South Korean economy and manufacturing at modern times. To do this, based on the analysis of theoretical approaches and empirical studies of agglomeration effects in other countries, the most appropriate assessment method was selected that uses the Cobb-Douglas function. The concentration of economic activity is expected to have a significant impact on productivity in most sectors of the Korean economy. At the same time, more high-tech industries should benefit more from agglomeration of urbanization, while others benefit from concentration in specialized areas. It was determined that agglomeration effects have a significant impact on Korean economy and manufacturing, comparable to the results of previous empirical studies in Europe and North America. The negative impact of agglomeration is observed in agriculture, and various services are practically not at all affected by agglomeration. Contrary to expectations, agglomeration in Korea does not have such a strong impact on the finance and insurance, as in other countries. The positive impact of Marshall (MAR) agglomeration economies, that is, due to the concentration of enterprises in one industry, is maximum for wholesale and retail trade, real estate, information and communication technologies (ICT) and the mining industry. Real estate and ICT also benefit the most from agglomeration of urbanization (Jacobs effects) — the concentration of firms from different industries. For the Korean manufacturing industry, agglomeration of localization is more important, especially for the chemical industry and metallurgy, while agglomeration of urbanization is significant only for more high-tech industries (electronics, transport engineering). The results are significant for the development of regional and sectoral development strategies for countries already using the Korean experience or wishing to adopt certain successful mechanisms for optimizing regional industrial development policy.
... Other authors stress an indirect, adverse effect of the existing regional gap in the national economy, which may lead to redistributive conflicts and undermine good governance (Bakke and Wibbels 2006;Kyriacou 2012;Kyriacou and Roca-Sagalés 2014). On the other hand, theoretical studies, such as those describing theories of regional growth or models of New Economic Geography (NEG), argue that regional disparities are a phenomenon associated with the unbalanced nature of economic growth and can enhance development in border areas (Perroux 1955(Perroux , 1964Boudeville 1966;Czuma 1973;Baldwin and Forslid 2000;Fujita and Thisse 2002). ...
... According to the New Economic Geography (NEG) models, unbalanced economic growth creates favorable conditions for agglomeration. Some authors find empirical evidence for these assumptions, emphasizing a positive relationship between growing population density and the average size of cities and economic growth (Fujita and Thisse 2002;Baldwin and Martin 2004;Bettencourt and West 2010;Frick and Rodríguez-Pose 2016;OECD 2016). Other scholars underline a positive spillover effect of agglomeration, which weakens as the economy reaches higher stages of development (Castells-Quintana and Royuela 2014; Camagni et al. 2015). ...
The study aims to examine whether regional disparities within a country affect national economic growth. To achieve this, the study employs spatial panel data models that consider the role of geography in economic development. The analysis covers 17 EU countries with five or more regions at the NUTS 2 level, spanning from 2000 to 2020. Regional disparities are calculated using polarization measures. The findings indicate that an increase in regional disparities, in the form of a shrinking range of regions with GDP per capita close to the national average, has a negative impact on economic growth. However, the division of a country's regions into two groups (bipolarization), poor and rich, does not affect national economic performance. Furthermore, the results of robustness tests reveal that regional disparities have a detrimental effect on growth in the EU's new member countries, which joined in 2004 and later, whereas the relationship is insignificant in the case of old member states' economies.
... Our analysis of these demand and supply potentials focuses on local economies, typically municipalities, also referred to as urban areas. These urban areas can be grouped into larger contiguous urban regions, driven by agglomeration processes (Fujita and Thisse 2002). ...
... The supply potential analysis belongs to a theoretical framework in which increasing returns to urban development is generated by monopolistic competition between service varieties which are sold as intermediary inputs to other sectors. The productivity of the economy increases as the multiplicity of service input varieties increases (Rivera-Batiz 1988;Fujita and Thisse 2002). The critical mechanism is that increasing supply of business services also implies that the differentiation of accessible services increases, and the extended scope of service varieties enables service-buying firms to enhance their productivity. ...
The aim of this paper is to demonstrate how economic growth stimulates business-service providers to develop new service varieties, which, in turn, enhance the productivity of business-service buyers. This creates a coevolutionary process where service suppliers and customers interact, leading to an increase in the number of differentiated service offerings. We introduce a framework for local economies, wherein business-service sectors evolve in response to local demand potential, while non-business-service sectors grow based on each economy’s supply potential. Business service growth is more rapid in local economies with higher demand potential, while non-business-service sectors expand faster in areas where the business-service supply potential is greater. A key assumption is that business service firms operate in a monopolistic competition environment, where an increase in business-service capacity leads to an expansion in the variety of services offered. This, in turn, enhances the diversity of service offerings in municipalities with strong demand potential. Additionally, service providers not only deliver innovation-related information to client firms but also unintentionally disseminate knowledge within the region, fostering knowledge spillovers among firms.
... There is a well-established literature on industrial clusters and how they can play a key role in the development and expansion of cities (Hoover & Giarratani, 1984;Krugman, 1995;Melo, Graham, & Noland, 2009;Porter, 2000;Stimson, Stough, & Roberts, 2006). As firms within an industry locate near each other, they can expect economies due UNLV Gaming Research & Review Journal Volume 27 (2023) Paper 5 to reduced transport costs (Belleflamme, Picard, & Thisse, 2000;Glaeser, 2010), the availability of specialized input services, and the formation of a highly specialized labor force (Fujita & Thisse, 2013). These economies make the clustered industry more profitable and can promote increased economic development. ...
... Second, it is quite common in the empirical literature to proxy agglomeration forces using the so-called market potential or market access variable. Fujita and Thisse (2013) point out that the market potential effect is probably responsible for the agglomeration of economic activities at a large geographical scale but not at a local spatial level of analysis such as the ones conducted in these types of empirical works. Finally, testing the causal effects of agglomeration forces on tax-setting decisions across local jurisdictions clearly violates the labour immobility assumption upon which FC capital models are built. ...
This paper extends a linear footloose capital (FC) model to examine the effects of public spending allocations affecting firms’ relocation decisions on the link between agglomeration economies and business tax rates. We find that the standard results of taxable agglomeration rents in an FC model are either magnified or partially offset, depending on the relative intensities of these types of jurisdictions’ public spending allocations. Empirically, we aggregate data at the level of local labour markets (LLMs) to exploit the relationships from the model. LLMs data, as opposed to municipal-level data, allow, on the one hand, the fulfilment of the labour immobility assumption implied by FC models, and, on the other, the use of market potential as a meaningful proxy for agglomeration economies. The results of our estimations for the 447 Spanish LLMs over the period 2006–2016 find the existence of taxable agglomeration rents. Additionally, public spending allocations are found to have a significant impact on the agglomeration economies-tax-setting relationship. Our results are robust to controlling for alternative neighbourhood criteria.
... The concentration of economic activity in a few specific locations has been related to a wide range of positive externalities that act as important drivers of economic growth (Marshall 1890;Jacobs 1969;Lucas 1988;Glaeser 2011). Theoretical works such as Martin and Ottaviano (1999), Fujita and Thisse (2002), Baldwin and Martin (2004), Duranton and Puga (2004) and Rosenthal and Strange (2004) support the idea that agglomeration encourages and strengthens economic growth through the efficiency gains deriving from proximity. There is a wide range of models to explain the impact of agglomeration on economic growth. ...
Over recent decades a handful of very rich European regions have increased the gap separating them from the European average in terms of labour productivity. In this paper we extend a spatial version of the Mankiw, Romer and Weil to highlight the differential impact of spillovers linked to human capital over regions with agglomeration economies. The theoretical model leads to a cross-sectional spatial Durbin model specification, which is estimated for 121 EU regions for 1995–2014 period. An interaction term of human capital with a dummy variable is used to capture the externalities of human capital in the most agglomerated regions. The dummy relies on composite indexes of agglomeration that consider the spatial dimension of the data. The indexes let us distinguish between regions intrinsically agglomerated, mainly the capital cities, and those that become agglomerated by the spatial relationship with their neighbours. Our main result shows that investment in human capital has stimulated labour productivity growth in those regions with the greatest potential to benefit from agglomeration economies and it is an important source of divergence across European regions.
... Diğer yandan, Krugman (1991Krugman ( , 1992bKrugman ( , 1997Krugman ( , 1999, Venables (1996), Fujita vd. (1999) ve Fujita & Thisse (2013) öncülüğündeki araştırmalar ise yerleşim problemine Endüstriyel Yerleşim Teorisinin günümüzdeki baskın yaklaşımı olan Yeni Ekonomik Coğrafya çerçevesinde odaklanmıştır. Bu çalışmalarda temel olarak iktisadi faaliyetleri belirli bir bölgeye çeken veya bölgeden iten etkenlerin ortaya çıkarılması amaçlanmıştır Yeni Ekonomik Coğrafya kapsamında Krugman (1990Krugman ( , 1991, "kümelenme" kavramını artan getiriler, ulaştırma maliyetleri ve faktör hareketliliği açısından ele almış; yüksek teknolojili firmaların yerleşim örüntülerinin sektörel özellikler yerine klasik iktisadi nedenler (ölçek ekonomileri, emek yerleşimi ve hareketliliği, ulaştırma maliyetleri) aracılığıyla daha iyi açıklayabileceğini göstermiştir. ...
Bu çalışmada Yerleşim Teorisi çerçevesinde geliştirilen model ve yaklaşımlar anlatılmakta ve ilgili literatür çerçevesinde yapılan çalışmalar gözden geçirilmektedir. Çalışmanın temel amacı, Yerleşim Teorisi’nin tarihsel süreç içinde geçirdiği dönüşümü, benimsenen yaklaşımları tartışmak ve karşılaştırmalı olarak incelemektir. Bu çerçevede, öncelikle Yerleşim Teorisi kapsamında geliştirilen model ve yaklaşımlar anlatılmaktadır. Daha sonra, ilgili literatür incelenmektedir. Literatür taramasının ilk aşamasında Web of Science veri tabanında 1979-2024 yılları arasında yayınlanmış farklı türdeki toplam 6,081 eserde en sık kullanılan anahtar kelimeler, bu kelimeler arasındaki bağlantılar ve literatürdeki ağırlıklarının yıllar içindeki değişimi, VOSviewer yazılım aracı kullanılarak bibliyografik ağ haritası yardımıyla analiz edilmektedir. İkinci aşamada, firma yerleşimine odaklanan çalışmalar, firma yerleşimini etkileyen faktörler ve çalışmalarda izlenilen metodolojik yaklaşım çerçevesinde ele alınmaktadır. Böylece bir firmanın bir bölgeye ilk olarak veya yeniden yerleşme kararında, firma ve bölge açısından önemli olan faktörler ve göstergeler tanımlanmaktadır. Çalışmada sunulan bilgi ve gerçekleştirilen literatür taraması aracılığıyla Yerleşim Teorisi kapsamında benimsenen yaklaşımların zaman içinde birbirlerinden ve ortaya çıktıkları çağın iktisadi ve toplumsal koşullarından nasıl beslendikleri ortaya konulmaktadır. Genel olarak yığılma ekonomileri ve ulaştırma maliyetlerinin yerleşim kararı üzerindeki etkisine odaklanan literatür, araştırmacıların gerçek hayata uyumlu ve en iyi sonuca ulaşma çabalarıyla genişlemeye devam etmektedir. Dolayısıyla bu çalışmanın hem Yerleşim Teorisi’nin gelişim sürecine yönelik olarak bütüncül bir bakış açısı sağlaması hem de bölgesel kalkınma plan ve politika uygulamaları açısından faydalı olması beklenmektedir.
... Firms have incentives to be close to each other, hence generating increasing returns and agglomeration economies (external and internal). However, gathering firms in either a Central Business District (CBD) or Secondary Business Districts (SBDs) leads to high land rents at these locations and high commuting costs for workers (Fujita and Thisse, 2013). Over the long run, high home-to-work costs may induce adjustments of job and household locations, which requires close scrutiny. ...
This article aims to measure the efficiency of different road pricing schemes (Pigouvian tax, flat tax and cordon toll) to address congestion externalities when the locations of jobs and dwellings within a city are endogenous. The model captures the fact that commuters face a trade-off between taking advantage of the wage premium in the Central Business District (CBD) and being stuck in traffic. I find that the Pigouvian tax strategy is not a social optimum due to the presence of two market failures in the urban economy: congestion and misallocation of jobs within the city. A Pigouvian tax on commuters cannot solve two different problems simultaneously, namely, reducing the congestion level given the locations of jobs and reaching the optimal spatial allocation of firms. Without regulation, the number of jobs in the CBD is too high (and the congestion cost is excessive), while the Pigouvian tax generates a CBD that is too small. In addition, a flat tax is not necessarily worse than a Pigouvian tax, in contrast to the cordon toll.
... Holling (1973) first proposed "resilience" in ecology, believing it includes maintaining and repairing after suffering shocks. Later, the concept of resilience was introduced into economics and became an effective tool for scholars to analyze and explain various complex economic phenomena (Fujita and Thisse, 2002). Martin et al. (2015) also have a more comprehensive understanding of economic resilience, emphasizing resistance, adaptability, recoverability, and vulnerability in the face of shocks. ...
Introduction
With the rapid development of digital agriculture, digitalization has gradually become a key factor affecting the resilience of China’s pig farming industry.
Methods
From both the test results and the theoretical point of view, the individual fixed-effect model is more suitable for this paper’s study. Therefore, based on the panel data of 31 provinces in China from 2011 to 2022, this study constructs an individual fixed-effect model to examine how digitization affects the resilience of China’s pig farming industry.
Results and discussion
The findings indicated that digitization significantly enhanced the resilience of China’s hog breeding industry, especially in potential growth areas. Improving breeding technology and scale is a crucial avenue for digitalization to bolster the industry’s resilience. Digitalization exerts a double threshold effect on the industry’s resilience, with its promotional impact only realized within a specific range. The article proposes policy suggestions, such as strengthening infrastructure construction and giving play to regional advantages.
... This perspective is particularly relevant to our study, as it suggests that the integration of AR technologies with cultural events could enhance a city's appeal to creative professionals and tourists alike, potentially stimulating economic activity. Moreover, the New Economic Geography model, pioneered by Krugman (1991) and further developed by scholars like Fujita and Thisse (2013), emphasizes the importance of increasing returns to scale and transportation costs in shaping urban economic landscapes. This model provides a theoretical basis for understanding how technological innovations like AR cartography might alter the economic geography of cities by reducing information asymmetries and enhancing accessibility to cultural events. ...
This study investigates the adoption and economic impact of Augmented Reality (AR) cartography in cultural tourism contexts. Drawing on the Technology Acceptance Model and cultural tourism literature, we examine how perceived usefulness, ease of use, and enjoyment influence AR adoption, cultural event experiences, and local economic outcomes. The study employs a quantitative approach, utilizing structural equation modeling to analyze data collected from 487 participants at a major cultural event. Findings reveal that AR cartography adoption significantly enhances cultural event experiences and increases local business spending, both directly and indirectly through extended length of stay. Demographic factors, particularly age, gender, and education level, moderate these relationships. Notably, the study demonstrates that AR use creates a virtuous cycle of improved experiences, longer stays, and increased spending. This research contributes to the literature by providing empirical evidence for the economic benefits of AR in cultural tourism, extending beyond previous studies that focused primarily on user satisfaction and behavioral intentions. It also offers practical implications for destination managers and policymakers, suggesting that investment in AR infrastructure could yield substantial economic returns. The study opens new avenues for research into the role of immersive technologies in driving sustainable economic development through cultural tourism.
... The New Economic Geography hypothesis is a well-known theory that highlights how agglomeration effects, transportation costs, and economies of scale shape the spatial patterns of trade and economic activity [51,43,6]. This theory states that businesses cluster in areas where they may take advantage of input availability, cost benefits, and market closeness, all of which increase their export competitiveness [33]. Porter's Diamond Model is another pertinent theory that posits four interrelated factors-factor circumstances, demand conditions, related and supporting industries, and firm strategy, structure, and rivalry-influence a firm's competitiveness in a given region [72]. ...
This comprehensive assessment of the literature looks at the strategic significance of location for export competitiveness. In order to provide a nuanced understanding of how geographic location affects firms' ability to compete in export competitiveness, the review synthesizes key findings and insights from a thorough analysis of 71 scholarly articles from reliable databases, including Scopus, Web of Science, JSTOR, Science Direct, PubMed, DOAJ, and IEEE Xplore. A number of criteria are identified and categorized in the evaluation, including market accessibility, established trade routes and infrastructure, availability of resources, capital, and inputs, institutional support, trade agreements, economic integration, and regulatory framework. Important factors that affect export competitiveness include the innovation environment, industry clusters, the agglomeration effect, the availability of skilled workers, and proximity in terms of language and culture. The case study on best practices has been delivered. Moreover, it highlights gaps in the literature and offers insightful information for new lines of inquiry. This review provides a comprehensive understanding of the strategic significance of geography in influencing enterprises' export plans and performance in the global marketplace by combining empirical data with theoretical frameworks. The review's conclusions broaden our theoretical and practical understanding of how firms' location decisions are influenced by location, which helps managers run their businesses profitably.
... Krugman (1996) argues that agglomeration may cause land resource tension, increase land cost and environmental pressure, and thus reduce innovation efficiency. Based on the centerperiphery model, Baldwin (2000), Fujita (2002), and Ottaviano (2003) supplemented this theory from the perspective of factor flow, which together formed the theoretical system of economic agglomeration in new economic geography. 1 There are many definitions of eco-efficiency, but what all of them have in common is their emphasis on achieving maximum output with minimal resource consumption and environmental costs . ...
Since 2014, China’s economy has transitioned from rapid growth to the new normal, and the challenges of resource shortages and environmental pollution remain prominent. Therefore, China’s contemporary economic development objective is no longer to pursue high-speed growth alone but to achieve high-quality development. Green development is an internal requirement and a crucial choice for high-quality economic development. As the most distinctive and universal geographical distribution feature of economic activities, industrial agglomeration has a broad and profound impact on industrial and regional economies and the advancement of green development. This study examines 27 manufacturing industries in China to investigate the influence of agglomeration on industrial ecological efficiency. First, we empirically tested this influence from an overall perspective. We then divide manufacturing industries into technology-, capital-, resource-, and labor-intensive industries. This study constructs linear regression and threshold models to empirically analyze the divergence in influence effects among the four types of industries. The results reveal that the average influence of the manufacturing industrial agglomeration on industrial ecological efficiency is an inverted N-shaped threshold effect. Notably, the agglomeration of technology-intensive industries significantly promotes ecological efficiency. By contrast, resource-intensive industry agglomeration exhibits a restraining effect. Finally, labor- and capital-intensive industry agglomerations present prominent threshold effects, revealing inverted N-shaped and U-shaped nonlinear relationships, respectively. The conclusions of this research can serve as a reference for the policy formulation of green industrial development in China and other transitional economies.
... Multinational companies organize and execute independent production activities in different regions, and assemble a dynamic process of creating value. At the same time, the global value chain (GVC) covers the entire process, from product design conception to nal interaction (Fujita and Thisse, 2013). With the advantages of strong capital, advanced technology, and well-known brands, developed countries dominate the high value-added links, such as brand operation, research and development (R&D) design, and marketing, in the development of the GVC. ...
To overcome the problems of environmental pollution and energy shortage that have accumulated in the extensive economic growth model, the Chinese government is seeking to optimize the industrial structure by strengthening environmental regulations. However, how environmental regulations promote industrial structure upgrading has not yet been carefully explained. Therefore, this study empirically tests the influence of environmental regulation on industrial structure upgrading using mediating models. The results show that environmental regulation can stimulate industrial structure upgrading, not only directly but also through the mediating effects of technological innovation and global value chain embeddedness. Moreover, the effect of environmental regulation on industrial structure upgrading shows regional heterogeneity. Therefore, we propose promoting regional industrial structure upgrading through the following methods: constructing an inclusive environmental regulation system, improving scientific and technological innovation, exploring a flexible and free system of opening-up, and accelerating the construction of the domestic demand system.
... Dans la réalité, son analyse cherche à expliquer le choix de localisation des activités dans un espace. À partir des développements précédents, il en ressort que l›économie géographique s'engage à la compréhension des conséquences économiques de l›espace car le processus de développement économique et l'évolution de la répartition des activités sont étroitement liés (Fujita, Krugman et Venables, 1999Fujita et Thisse, 2002. L'analyse de la disparité de développement fait que les territoires ne peuvent pas être tous au même niveau de performance et les inégalités ne vont que subsister. ...
Ce papier évalue les effets de la connectivité maritime sur les échanges commerciaux des pays côtiers d'Afrique en s'appuyant sur l'économie géographique. En utilisant le modele de gravité augmenté sur la période de 2006-2013 a partir de la méthode de Pseudo Maximum de Vraisemblance de la Loi de Poisson (PPML), les résultats obtenus montrent que le délai et le cout du transport des conteneurs constituent des obstacles majeurs aux exportations des pays côtiers d'Afrique.
... By making such aspects numerically visible, our paper also contributes to the literature on spatial economic patterns, which has a long tradition in economic modeling; see, e.g., Proost and Thisse (2019) for an overview. In the "new economic geography" literature, see, e.g., Fujita et al. (1999); Fujita and Thisse (2013), it is mainly the trade-off between economies of scale on the one hand and immobile consumers on the other hand that generates interesting patterns. High transportation costs matter as they favor local produce-and-buy decisions instead of long-distance shipments, thus counteracting economies of scale. ...
We present a spatial and time-continuous Ramsey-type equilibrium model for households and firms that interact on a spatial domain to model labor mobility in the presence of commuting costs. After discretization in space and time, we obtain a mixed complementarity problem that represents the spatial equilibrium model. We prove existence of equilibria using the theory of finite-dimensional variational inequalities and derive a tailored diagonalization method to solve the resulting large-scale instances. Finally, we present a case study that highlights the influence of commuting costs and show that the model allows to analyze transitory effects of industrial agglomeration that emerge and vanish over time as in the real economy.
... However, the urban landscape of Manchester has shifted dramatically from its original industrial base due to the inner-city regeneration initiative in 1984. As the former industrial areas were being revitalized, the city saw a substantial decrease in its reliance on manufacturing, with the sector's contribution to the city's overall economic output plummeting from 70% in the mid-20th century to a mere 10% by 2008 [11]. This transformation was marked by the introduction of office-centric industries into the heart of Manchester, which significantly altered both the city's economic focus and its spatial organization [12]. ...
This study critically examines the applicability of the Standard Urban Model (SUM) in the context of Greater Manchester, utilizing empirical data and spatial analysis to explore its operational limitations and potentials. Originally conceptualized by William Alonso, the SUM provides a theoretical framework to understand intra-urban economic dynamics predicated on a monocentric city structure. Through a comprehensive dataset encompassing census demographics, housing prices, and GIS-mapped land-use patterns from 2015, this paper investigates the models ability to predict and describe urban land rent gradients and residential distribution relative to the citys Central Business District (CBD). The findings indicate that while the SUM may provide a generalized view of urban structure, it significantly underestimates the socio-economic diversities, technological advancements, and cultural influences that are inherent in urban development. Particularly, the analysis reveals that rental price declines with distance from the CBD are not as pronounced as predicted by the SUM, with a low coefficient of determination (R=0.2551). Furthermore, the study highlights how urban development in Manchester deviates from the monocentric model due to historical shifts, regeneration efforts, and the emergence of multi-centric hubs. This research underscores the necessity for adapting urban economic models to reflect the complexities and dynamic nature of modern cities, suggesting a shift towards more nuanced and flexible frameworks that accommodate the multifaceted influences on urban landscapes.
... Before the work of Fujita & Thisse (2002), mainstream economics lacked a direct focus on "resilience. " Their introduction of resilience into economic research marked the genesis of the concept of "economic resilience. ...
The coronavirus disease 2019 (COVID-19) epidemic has profoundly impacted the stability of China’s economy, resulting in severe short-term economic fluctuations. A critical question arises: How long did it take for China’s economy to return to its pre-epidemic development status? This paper aims to answer this question and conducts an in-depth analysis of China’s national economic resilience in the face of this unprecedented challenge. To achieve this goal, this paper begins by examining the progression of the COVID-19 epidemic and China’s corresponding economic policies. It then delves into the national economic resilience of China across macroeconomic, industrial, and financial dimensions. This is achieved by analyzing the trajectory of economic recovery in these three dimensions following the substantial shock of the pandemic. The result shows that China spent approximately 2 years to restore its macroeconomic development, industrial structure, and financial system to the pre-COVID-19 epidemic status. This result reflects the national economic resilience of China to some extent. Following the immense shock of the COVID-19 epidemic, China’s economy exhibited a rapid recovery, demonstrating robust national economic resilience. This recovery can be attributed to several factors: first, a solid economic foundation established over past decades; and second, the strategic policies implemented by China, including decisive epidemic management, effective fiscal measures, and adaptable monetary policy.
... From an economic point of view, New Economic Geography explains the asymmetric impact of infrastructure investments on different regions. Because of the ´network character´ of the spatial economy, better infrastructure may help the economic core at the expense of the periphery (Fujita and Thisse 2002;Ottaviano 2008;Puga and Venables 1997). In line with this argument, Vickerman et al. (1999) investigated the impact of the development of the Trans-European Transport network (TEN-T) on core and peripheral regions of the EU and concluded that it was not possible to confirm that TEN-T was a tool that would promote regional cohesion. ...
Aleš Franc, Soňa Kukučková, Marek Litzman: Too far to go to work? Examining the effect of changes in the time taken to commute on regional unemployment Time spent commuting plays a significant role in decision-making within the labour market, particularly for job seekers. Investments in road infrastructure have a direct effect on commuting times and thus may also have an effect on the local labour markets. The aim of the article is to evaluate the effect of improvements in infrastructure on regional unemployment. In this paper, we use a unique database that includes data on the time taken to commute from all municipalities in the Czech Republic (n=6237) to their regional centres for every month between March 2014 and December 2022 (106 periods). Overall 1534 changes that met the criteria for a significant change in travelling time were identified. Our results suggest that a one-minute drop in commuting time from the respective municipality to the regional centre is linked to a 0.07 percentage point drop in the unemployment rate one year later, in comparison to the control group. The ratio rises over time, after five years, the same one-minute reduction in commuting time, is then related to a 0.19 percentage point drop in unemployment. Therefore, better infrastructure can help to reduce differences in regional rates of unemployment and can justify infrastructure investments.
... In a more recent work Fujita and Thisse (2002) further elaborated on monopolistic competition models focusing on the "economic", as distinct to the natural, mechanisms that beget agglomeration, taking due account of increasing returns to scale, Marshallian externalities, and mobility costs. In that context, Fujita and Thisse examined industrial agglomeration under monopolistic competition using a core-periphery model following Krugman's (1991a) original formulation. ...
Porter’s theory of industrial clustering is widely accepted but has seldom been assessed. Thus, its critical evaluation is essential so as to learn about its intellectual inheritance from earlier theories of economic agglomeration and discern its actual explanatory capabilities and its true potential as a guide for strategy and policy formulation. This paper seeks to take a step in this direction by seeing through the halo of infallibility often assigned to this theory so as to dispel the quasi-magical powers usually granted to the policies it inspires. It focuses on a comprehensive account of the case of the high tech ecosystem that emerged and developed in Guadalajara, known as the Mexican Silicon Valley since the mid 1980s.
... The physical geography of a region can also influence the nature and pace of suburbanization. For instance, coastal cities with limited available land may experience more constrained suburban growth, while cities with extensive surrounding land may undergo more rapid and extensive suburbanization (Fujita & Thisse, 2013). Research on the phenomenon of suburbanization has also been carried out in Central-Eastern Europe, including Poland. ...
Cities function in people’s minds as reservoirs of opportunities and possibilities. For many people, living in a city seems an attractive and logical life choice compared to areas perceived as provincial. However, the reality of the modern city is also associated with numerous nuisances. The occurrence of these disadvantages has led to the development of mechanisms intended, at least in principle, to counteract the ills of urban life. One such mechanism is the phenomenon of suburbanization. The outpouring of urban functions beyond its boundaries occurs all over the world. However, this phenomenon also entails exacerbating transport bottlenecks, requires a lot of local investment, contributes to the deterioration of the environment, and disrupts household time budgets. This paper addresses population change as one of the demographic aspects of suburbanization. The trends characterizing the outflow of population from cities and the inflow of population to suburban areas has been examined. The study covers several of Poland’s largest cities using data from the 2011 and 2021 National Censuses. The main objectives of this study are to assess the scale of suburbanization in large and medium-sized Polish cities, so as to determine whether suburbanization occurs similarly regardless of city size. To identify those urban centers where the population change in neighboring municipalities is particularly high so as to raise the awareness of decision-makers and real estate market participants in relation to the challenges posed by suburbanization. In addition, using one city as an example, an assessment of how the influx of population affects number of transactions on selected real estate market was carried out. The results of the study may be useful in analyzing investment needs for various types of infrastructure, including roads and technical infrastructure.
... The model's spatial equilibrium is sustained by differences in local costs of living as in Rosen (1979) and Roback (1982). The local productivity and cost of living differences reflect what Fujita and Thisse (2013) label the "fundamental tradeoff of urban economics." Qualitatively, the model provides a natural interpretation of all the empirical patterns that we document. ...
El objetivo de esta investigación es identificar los factores intrínsecos, extrínsecos y demográficos que determinan el precio del suelo por el lado de la demanda, en el mercado inmobiliario de la zona urbana de Tijuana. El estudio parte del enfoque teórico de la economía regional, urbana y del método de precios hedónicos. La estrategia metodológica consistió en el análisis de componentes principales, el modelo de precios hedónicos y los modelos de rezago espacial, error espacial y cambio de regímenes espaciales. Se encontró una relación significativa y positiva entre los atributos de los inmuebles, las características demográficas y los precios. Asimismo, se identificó un comportamiento agrupado espacialmente de los factores principales que representan la infraestructura y equipamiento de los vecindarios, lo que apunta a la existencia de submercados por sectores con características similares. Esta investigación contribuye a la bibliografía académica sobre ciudades fronterizas y mercados del suelo en México y América Latina.
El espacio fronterizo entre México, Estados Unidos y Canadá, se caracteriza por una contigüidad geográfica e interacción social que históricamente ha dado pie al establecimiento de comunidades en sus límites territoriales. En dicho contexto de cercanía e intercambio, conviven mercados de vivienda que se extienden a través de múltiples jurisdicciones. A su vez, estos mercados se segmentan en submercados por condiciones extrínsecas de los vecindarios, por atributos intrínsecos de los bienes raíces residenciales y por la combinación de los dos anteriores. El objetivo general de esta investigación es analizar la segmentación de submercados de vivienda en un contexto fronterizo. El área de estudio incluye trece pares de ciudades entre México, Estados Unidos y Canadá. La metodología consistió en un estudio de sección cruzada a partir del modelo de precios hedónicos, enriquecido con la identificación de submercados para cada ciudad. La segmentación se realizó mediante el análisis de componentes principales, clasificación por K-Medias y análisis de conglomerados jerárquicos, incluidos en la estimación del modelo de regímenes espaciales. La incorporación de los submercados en la especificación del modelo de precios hedónicos, aporta un mayor poder explicativo de su comportamiento. Al mismo tiempo, esta segmentación permite señalar y comparar mercados de bienes inmobiliarios residenciales contiguos pero pertenecientes a jurisdicciones distintas.
We develop a model of social integration of immigrants in which both native individuals and immigrants decide whether to accept each other’s culture and norms. Whereas cultural acceptance leads to greater returns due to agglomeration economies, it also requires higher communication costs. We show conditions under which higher social integration of immigrants occurs in large cities and characterize the efficiency of an equilibrium. Our findings are supported by data from the European Social Survey.
Foreign direct investment plays an important role in the urbanization process in Southeast Asia, helping to develop infrastructure, create jobs, promote industrialization and urban modernization. The study uses balanced panel data from 11 Southeast Asian countries during the period of 2010-2023 to assess the impact of foreign direct investment on urbanization. The study uses the pooled regression model (OLS), fixed effects model (FEM), random effects model (REM) combined with necessary tests to select the appropriate model. After testing the defects, the study uses the generalized least squares model (FGLS) to overcome. The regression results show that foreign direct investment has a positive and significant impact on urbanization in Southeast Asian countries. In addition, the study also found negative impacts of economic growth and positive impacts of structural, openness and environmental variables on urbanization in these countries.
У статті досліджено теоретико-методологічні основи та практичні аспекти впливу інноваційних парків на процеси урбаністичного розвитку в контексті сучасних трансформацій. Акцентовано увагу на їхньому двосторонньому зв’язку з містами: парки посилюють інноваційний потенціал, а міста надають інфраструктурне та інтелектуальне забезпечення. Визначено роль інноваційних парків у трансфері технологій, формуванні інноваційної культури та запобіганні технологічному відставанню міст. Обґрунтовано необхідність моніторингу інноваційної активності, цифрових платформ для управлінських рішень та координаційних структур. Запропонований механізм урбаністичного розвитку охоплює R&D центри, бізнес-інкубатори, акселератори, сприяючи підвищенню конкурентоспроможності міст та якості життя мешканців.
Le présent article examine les facteurs influençant la rentabilité de l’artisanat du bois au Bénin, en utilisant un modèle de régression linéaire multivariée appliqué à des données collectées auprès de 190 artisans des communes de Bembérékè, Parakou et Pèrèrè. Les résultats montrent que la rentabilité est significativement influencée par le type d’activité, la zone de résidence, l’expérience professionnelle, les relations familiales avec des artisans et la qualité des produits. Pour améliorer cette rentabilité, il est nécessaire de renforcer l’organisation des artisans, de promouvoir leur formation, et d’élargir leur accès à l’éducation, notamment pour les charbonniers et les menuisiers.
Observation and theory confirm that economic activity can benefit from spatial agglomeration and clustering. Typically this has been analysed at the region or city scale, but recently micro-local and neighbourhood dynamics have drawn attention. Most studies first observe agglomeration, then infer or theorise processes that drive it; these inferred processes have become embedded in urban policy thinking. One such process is localised knowledge exchange, believed to be encouraged by spatial proximity and third spaces such as cafes and parks. In this study of Montreal firms, we directly explore the importance that firms attach to different scales and places at which knowledge exchange occurs. Overall, micro-local and local scales are considered less important than metropolitan and wider scales; third spaces are not considered important, except by marketing innovators; and there is no connection between innovation and the importance of local scale for knowledge acquisition. However, results are not homogeneous across urban context, economic sector or innovation profile: the association between micro-local knowledge exchange and geographical location is complex and cannot be generalised across neighbourhoods or firms.
This study investigates the complex urban-rural dynamics of Nanjing through a novel multi-modal analysis of 76,288 social media posts, addressing the critical gap in understanding intra-city variations in perceived urban characteristics across rapidly developing Chinese cities. By integrating computer vision techniques with natural language processing, we develop a comprehensive framework for analyzing public sentiment and attention patterns across eleven districts. Our findings reveal distinct spatial gradients in urban perception that challenge traditional urban-rural dichotomies. While central districts exhibit higher positive sentiments toward built environment (0.65-0.71) and economic factors, peripheral areas show stronger positive associations with environmental quality (0.42) and community cohesion (0.47). Correlation analysis demonstrates significant relationships between socioeconomic indicators and digital engagement patterns, with education levels strongly correlating with cultural heritage attention (r=0.76) and income levels with economic discourse (r=0.94). SHAP analysis further reveals non-linear interaction effects between urban characteristics and public sentiment, particularly in transitional zones. These findings contribute to theories of post-reform Chinese urbanization while offering practical insights for targeted urban planning strategies. The study’s methodological framework provides a replicable approach for analyzing intra-city variations in urban perceptions across rapidly urbanizing regions.
The development of cities in Russia in the post-Soviet period was characterized by the absence of a state urban policy, both due to the lack of a permanent regional policy as a whole and due to the narrowness of the city information base. As a result, the policy towards cities was situational (reactive) in nature and dealt with problematic areas. Modern proactive measures of spatial development (ASEZ, SEZ, and FPV), in turn, are focused mainly on regional priorities. As a result, the largest cities (with the exception of two capital cities) are not objects of a systemic policy that is aimed at problematic areas, “growth points,” or urban agglomerations. The lack of a holistic “urban” policy limits the prospects of the largest centers that need to adapt regulatory measures due to different dynamics and trends. The orientation of city research (and the formats of their development indices) to cover the maximum number of cities complements the situation, which also does not allow judging about special processes within the framework of specific classes of cities. The purpose of the paper was a comparative analysis of 14 cities with a million-plus population in the Russian Federation (urban districts). The analysis was based on demographic and socio-economic indicators per capita, including their dynamics for 2019–2022 (10 indicators). The general result of the paper was the typology and ranking of cities with a million-plus population, identifying their current position and trends in key components of their development. The theoretical result is the justification for the need for a separate study of specific classes of cities. The practical result identifies the level of differentiation of cities with a million-plus population by key parameters and the identification of leading and lagging groups of cities as a guideline for a promising urban policy.
The efficient development of the urban economy is a major concern of scholars in the fields of geography and urban science. In the context of globalization, informatization, industrialization, and urbanization, the external relationships of China’s cities are experiencing the joint action of urban scale hierarchies and connection networks (“hierarchy-network”). However, under the interactive effect of the two, the mechanism of urban economic efficiency (UEE) is unclear. Therefore, based on Baidu migration data, the regionalization with dynamically constrained agglomerative clustering and partitioning (REDCAP) method, and a spatial simultaneous equation model, this paper analyzes the UEE spatial pattern and mechanism in China. The results indicate that: (1) the urban economy has a superlinear relationship with the population size. However, the benefit of this superlinear growth is in marginal decline. (2) The UEE shows a pattern of differentiation between China’s eastern, then central, and then western region. Also, local differences are found within the three major sub-regions. (3) The increase of urban network centrality can promote UEE, while the impact of urban scale is negative. (4) There is regional heterogeneity of the interactive effect of “hierarchy-network” on UEE. This study reveals the influencing mechanism of UEE and also provides policy implications for the development of UEE.
En una economía de mercado, los precios de los bienes no necesariamente reflejan los derechos de propiedad de los factores productivos que agregan valor. Si la captura de la renta de la tierra agrícola fue ilegítima desde la economía clásica, la renta de la tierra urbana lo es aún más. Si la fertilidad era una cualidad natural del suelo, el propietario no aportaba nada adicional; en una economía urbana moderna, la “fertilidad” del suelo de un predio urbano proviene de la aglomeración. Los derechos de propiedad y de edificabilidad están inmersos, pero es evidente que este último es exógeno: la colectividad lo asigna o redefine, puesto que el interés individual no puede sobreponerse al interés de la sociedad. Entonces, ¿de dónde proviene el derecho a apropiarse del excedente colectivo implícito en el derecho a construir? La captación de rentas por parte de la comunidad permite financiar el desarrollo urbano, y su legitimidad deriva tanto de la fertilidad de la aglomeración como de la posibilidad de capitalizar cambios regulatorios en las ciudades. En este sentido, es necesario redefinir los acuerdos sociales para promover el avance del desarrollo.
Store agglomeration in a commercial district is considered to follow synergistic and complementary relationships between stores. The micro-interactions, that is, co-occurrence relationships, between stores are thought to create commercial districts’ universality and characteristics. This study aims to empirically identify latent attributes that can explain the mechanism of store agglomeration from the co-occurrence relationships between stores in commercial districts, and to identify universal characteristics in store agglomeration. We represented store agglomeration as a store co-occurrence network with stores as nodes and co-occurrence relationships between stores as links in 10 major commercial districts in Japan. We estimated latent attributes of stores that generated the store co-occurrence network and empirically clarified the quantitative and qualitative nature of store agglomeration. The co-occurrence networks of stores with estimated latent attributes were compared across those of districts, and the co-occurrence patterns common to latent attributes were clarified. The estimated latent attributes were empirically shown to have more explanatory power for the store agglomeration than the conventional business category classification, suggesting their usefulness as a new classification axis for stores. In addition, by comparing 10 districts, common co-occurrence relationships were extracted, and the universal spatial structure of store agglomeration was empirically clarified.
Forward-looking economic agents operating in a finite continuous geographic area choose how much to innovate at each point in time and space. Based on this assumption, the present study incorporates spatial interactions in endogenous growth models, addressing the criticism that such models are inconsistent with empirical evidence. More specifically, we introduce spatial production spillovers, knowledge diffusion across space, and the capability for spatial heterogeneity into a standard expanding variety growth model based on R&D. We study the properties of equilibrium and optimal allocations and argue that the characteristics are different from those of the non-spatial model, which alter the appropriate policy measures. Finally, we provide numerical examples demonstrating the importance of spatial dependent policy measures in achieving a balanced regional development.
Human behaviors have non-negligible impacts on spread of contagious disease. For instance, large-scale gathering and high mobility of population could lead to accelerated disease transmission, while public behavioral changes in response to pandemics may effectively reduce contacts and suppress the peak of the outbreak. In order to understand how spatial characteristics like population mobility and clustering interplay with epidemic outbreaks, we formulate a stochastic-statistical environment-epidemic dynamic system (SEEDS) via an agent-based biased random walk model on a two-dimensional lattice. The “popularity” and “awareness” variables are taken into consideration to capture human natural and preventive behavioral factors, which are assumed to guide and bias agent movement in a combined way. It is found that the presence of the spatial heterogeneity, like social influence locality and spatial clustering induced by self-aggregation, potentially suppresses the contacts between agents and consequently flats the epidemic curve. Surprisedly, disease responses might not necessarily reduce the susceptibility of informed individuals and even aggravate disease outbreak if each individual responds independently upon their awareness. The disease control is achieved effectively only if there are coordinated public-health interventions and public compliance to these measures. Therefore, our model may be useful for quantitative evaluations of a variety of public-health policies.
Origin-destination (OD) flow modeling is an extensively researched subject across multiple disciplines, such as the investigation of travel demand in transportation and spatial interaction modeling in geography. However, researchers from different fields tend to employ their own unique research paradigms and lack interdisciplinary communication, preventing the cross-fertilization of knowledge and the development of novel solutions to challenges. This article presents a systematic interdisciplinary survey that comprehensively and holistically scrutinizes OD flows from utilizing fundamental theory to studying the mechanism of population mobility and solving practical problems with engineering techniques, such as computational models. Specifically, regional economics, urban geography, and sociophysics are adept at employing theoretical research methods to explore the underlying mechanisms of OD flows. They have developed three influential theoretical models: the gravity model, the intervening opportunities model, and the radiation model. These models specifically focus on examining the fundamental influences of distance, opportunities, and population on OD flows, respectively. In the meantime, fields such as transportation, urban planning, and computer science primarily focus on addressing four practical problems: OD prediction, OD construction, OD estimation, and OD forecasting. Advanced computational models, such as deep learning models, have gradually been introduced to address these problems more effectively. We have constructed the benchmarks for these four problems at https://github.com/tsinghua-fib-lab/OD_benckmark. Finally, based on the existing research, this survey summarizes current challenges and outlines future directions for this topic. Through this survey, we aim to break down the barriers between disciplines in OD flow-related research, fostering interdisciplinary perspectives and modes of thinking.
We present a footloose capital model in a two‐country economy and the manufacturing and natural resource sectors with heterogeneous manufacturing firms to analyze the impacts of trade liberalization and technological progress on the net capital flows, net export, and social welfare. Our main analytical result is that a lagged country initially experiences capital outflow due to the high technological gap in the manufacturing sector with increasing returns to scale, then capital inflow due to the home market effect. This corresponds with the fact that China was a net importer of manufactured goods initially, and became a net exporter recently. These results are consistent with the data obtained after the reform and opening‐up policy in 1978.
В условиях стремительной трансформации жизненных укладов особое значение приобретает построение эко-системы региона как среды для формирования территориального профессионального потенциала, учитывающей региональные особенности и потребности работодателей. Показано, что особенностью проектируемой эко-системы является создание на основе IT-технологий единой платформы, обеспечивающей, с одной стороны, интеграцию цифровых образовательных сервисов и поисковых сервисов работодателей, с другой, – пространство для межличностных коммуникаций, предоставляющих жителями региона возможность обмена знаниями и мудростью во всех областях человеческой жизни, самоопределения в меняющихся социальных условиях, развития себя как гармоничной личности. Отражена значимость трансформации системы региона в экосистему для индустриальных регионов страны на примере Кемеровской области. Показано, что протекающие в регионе демографические процессы препятствуют развитию инноваций, повышению инвестиционной привлекательности, росту уровня жизни и увеличению доходов бюджета. При этом ориентация в регионе на создание и развитие рынков высокотехнологичной продукции и услуг требует наличия интеллектуально и профессионально развитых работников. Представлена концептуальная идея архитектуры экосистемы региона для формирования территориального профессионального потенциала, что обеспечит устойчивое региональное развитие.
During the rapid lifestyles transformation, it is important to construct the regional eco-system as an environment for the territorial professional potential formation, considering regional peculiarities and the employers’ needs. It is demonstrated that one of the key projected eco-system features is the unified platform creation based on IT technologies. That provides, on the one hand, the digital educational services integration and employers’ search services, on the other, a space for interpersonal communications, providing regional residents with the opportunity to exchange knowledge and wisdom in all areas of human life, self-determination in changing social conditions, oneself’ development as a harmonious person. The transformation significance of the regional system into an ecosystem for the industrial regions is reflected on the Kemerovo region example. It is shown that demographic processes occurring in the region hinder the innovations development in it, increase the investment attractiveness of the region, growth the living standard and budget revenues. At the same time, the regional goal to create and develop markets for high-tech products and services requires the presence of intellectually and professionally developed workers. The conceptual idea of the regional ecosystem architecture for the territorial professional potential formation, which will ensure the sustainable development of the region, is presented.
Introduction
This study delves into the intricate dynamics between fiscal policies supporting agriculture and the non-linear influence of agricultural science and technology innovation on enhancing agricultural resilience. We conducted research across 31 provinces (including autonomous regions and municipalities) in China from 2007 to 2021.
Method
By constructing the evaluation index system of agricultural resilience, the entropy value method is used to measure the value of agricultural resilience, and then standard deviation ellipse and center of gravity migration analysis, benchmark regression model, heterogeneity analysis, threshold regression model are used to analyze the relationship between agricultural science and technology innovation, fiscal policies supporting agriculture and agricultural resilience.
Result
(1) The analysis of the spatio-temporal evolution trend shows that the overall development of China’s agricultural resilience is relatively stable, the resilience range is expanding, and the geographical area with the southeast as the center of gravity presents a stronger pulling effect; (2) The benchmark regression model shows that agricultural science and technology innovation has a significant positive effect on agricultural resilience; (3) Agricultural science and technology innovation plays a nonlinear role in increasing agricultural resilience when fiscal policies supporting agriculture are used as a threshold variable. (4) Heterogeneity analysis highlights stronger promotion of agricultural resilience through science and technology innovation in non-main producing areas and economically underdeveloped regions.
Discussion
To address this, policymakers should leverage the resilience of the Southeast, boost innovation capacity, tailor innovation to local needs, and reinforce fiscal policies supporting agriculture. These insights provide valuable direction for policymakers in crafting effective measures to enhance agricultural resilience.
Georgia has a one-level system of governance. Regional
level of governance is not defined by law. However, historical
areas/regions are objects for policy planning (Jibuti, 2018:
526-529). Effectiveness of country’s regional division had not
been assessed or studied in terms of economic development
planning purpose. Our research aimed to define criteria for
such assessment and make an evaluation. These criteria were
formed based on study of different scientific approaches,
theories and models. Criteria which were used to assess
effectiveness of regional division in Georgia are following: (1)
Regions have central places, “core/leading centers”; (2) Each
region has settlements with high demand and settlements with
relatively low demand; (3) Human, capital and product flows
are more intensive within the region rather than with other
regions; (4) Influence of internal or external factors are similar
within the territory of a region; (5) Intensity of commuting
is high within a region; (6) Regions are administrative units;
(7) Natural resources, ecosystem or other geographical
characteristics are similar within a region; (8) Economic
conditions are somewhat similar within a region; (9) It is
possible to manage or govern a region (Kharaishvili, 2003: 88).
In order to make an assessment based on the abovementioned criteria we studied development strategies of
all regions (that are under control of Georgian government,
excluding the capital) in Georgia for 2014-2021, and analysed
regional statistics. Study results show that 5 criteria out of 9
are not true for Georgian regions. Effectiveness of the regional
policy will increase if the Georgian government establishes
functional regions, taking into account basic needs of people
inhabited in the specific areas (Bedianashvili, 2013: 38).
Os portos desempenham um papel estratégico no crescimento econômico do Brasil. O aumento das importações e exportações marítimas tem gerado uma crescente demanda por esses serviços, porém, a ineficiência logística e de transporte tem prejudicado as operações portuárias. Dessa forma, este artigo desenvolve um índice abrangente de acessibilidade para os portos brasileiros considerando fatores como profundidade do calado, conectividade com outros modais de transporte, distância até as capitais estaduais e qualidade das rodovias de acesso, com o objetivo de identificar os portos com a melhor acessibilidade no país. Dentre os resultados identificou-se que os portos mais acessíveis incluem Santos, Itaguaí, Rio de Janeiro, Paranaguá, São Sebastião e Itaqui, com um índice de acessibilidade superior a 0,60. Por outro lado, portos como Areia Branca, Ilhéus, Santana, Maceió, Recife, Aratu e Santarém apresentaram os piores resultados, com índices abaixo de 0,40. Isso destaca a importância da infraestrutura sólida e do potencial de mercado para melhorar a acessibilidade. Além, foi observado a necessidade de investimentos na infraestrutura de transporte aquaviário, especialmente na profundidade do calado. Portos como Pelotas, Porto Alegre e Estrela foram identificados com os menores calados, registrando índices de acessibilidade extremamente baixos (0,03 e 0,00). Esses resultados têm implicações importantes para orientar futuros investimentos e melhorias na infraestrutura portuária brasileira, visando aprimorar a acessibilidade e estimular o comércio marítimo do país.Palavras-chave: Índice de Acessibilidade; Brasil; Nova Geografia Econômica.
In this chapter, we conduct an empirical analysis using the new economic geography (NEG) model to examine the relationship between market access (MA, Krugman market potential), supplier access (SA), industrial agglomeration, and overseas location of final and intermediate goods production sites for Japanese electrical and electronics multinational firms (MNFs) in the processing and assembly industry in East Asia from 1995 through 2009. We conducted the conditional logit estimation of location choice of Japanese electrical and electronics firms in East Asian countries after calculating the MA and SA data using bilateral trade data from 1995 to 2009. From the estimated results, we found that wage rate, infrastructure, market access as a demand factor, and supplier access as a supply factor, and vertical and horizontal agglomerations affected foreign direct investment (FDI) flows in the Japanese electrical and electronics MNFs’ final and intermediate goods production sites in East Asia during 1995–2009. Furthermore, a comparison of two periods (1995–2000 and 2001–2009) for final goods production sites shows a negative sign condition for domestic SA during 1995–2000. However, the sign condition for domestic SA was positive during 2001–2009 because the supplier access of intermediate goods increased in East Asia during this period. Sign conditions for neighboring countries’ SA during both periods were positive and the results statistically significant.
This book presents important work by B. Curtis Eaton and Richard G. Lipsey on product differentiation, including studies of spatial differentiation and the industrial structures that give rise to this phenomenon. The book opens with an introductory overview essay and explains why the authors reject the neoclassical, competitive vision of the economy. The essays included cover issues such as: the theory of multinational plant location, product differentiation, monopoly, models of value theory, capital with special reference to entry and exit barriers and entry equilibrium, the existence of pure profit and the theory of market pre-emption.
Economic theories of systems of cities explain why production and consumption activities are concentrated in a number of urban areas of different sizes and industrial composition rather than uniformly distributed in space. These theories have been successively influenced by four paradigms: (i) conventional urban economics emphasizing the tension between economies due to the spatial concentration of activity and diseconomies arising from that concentration; (ii) the theory of industrial organization as it relates to inter-industry linkages and to product differentiation; (iii) the New Economic Geography which ignores land markets but emphasizes trade among cities, fixed agricultural hinterlands and the endogenous emergence of geography; (iv) the theory of endogenous economic growth. Among the issues examined are specialization versus diversification of cities in systems of cities, how city systems contribute to increasing returns in national and the global economies, the factors that determine skill distribution and income disparity between cities, the impacts of income disparity on welfare, whether population growth should cause economic activity to become more or less concentrated in urban areas, and how resources should be allocated efficiently in a system of cities. Related to the last issue, we consider models where cities are organized by local planners or developers as well as cities that self-organize by atomistic actions. A conclusion of the theoretical study of city systems is that markets fail in efficiently allocating resources across cities when certain intercity interactions are present and that a role for central planning may be necessary.
Spain provides an opportunity to study the causes of regional differences in industrial development over the nineteenth century. As transportation costs decreased and barriers to domestic trade were eliminated, Spanish manufacturing became increasingly concentrated in a few regions. This article combines Heckscher-Ohlin and economic geography frameworks and finds that comparative-advantage and increasingreturn effects were economically very significant and practically explained all differences in industrialization levels across regions. The deficits of some regions in terms of industrialization appear to have been largely attributable to their factor endowments and the absence of home-market effects for modern industries. Publicado
How should the size and number of cities evolve optimally as population grows? Stripped of the constraints of geography itself, the setup of the new economic geography (NEG) implies that de-agglomeration (or de-urbanization) is efficient. The number of cities increases while the size of each decreases on the optimal path until the economy suddenly disperses to tiny towns of stand-alone firms each specializing in a unique good. The cause of this narrow result is the NEG's strong emphasis on intercity trade to satisfy the taste for more goods. For the same aggregate population, a system of smaller cities saves time lost in commuting, has a larger labor supply, and makes more goods than does a system of larger cities. Falling interurban trading costs favor this de-urbanization process. Only if intraurban commuting costs fall sufficiently, can a pattern of growing city sizes be efficient with growing population. Of course, when the number of cities or the geographic space itself is limited or asymmetric, then agglomeration can arise as an artifact of the constraints imposed by geography as demonstrated by numerous NEG models. This reveals that the central agglomerative force in the NEG is space itself and not the underlying economic relations. Copyright 2004, Oxford University Press.
Facility location analysis deals with the problem of locating one or several facilities with regard to existing facilities and clients in order to optimize some economic criterion. In this survey, we consider specifically the problem of selecting one or several points of a network in order to optimize a function which is distance-dependent with respect to given points of the network. Minisum and minimax problems, where the objectives are to minimize respectively the sum or the maximum of different functions of distances, are reviewed. We also discuss models integrating more economic variables, such as prices, and putting more emphasis on the decision making context, particularly the competitive location models. Discrete models, for which the set of possible locations is finite and which have received the most attention of practionners, are presented as well.
'This Handbook is a stellar compilation of up-to-date knowledge about the important topics in transport economics. Authors include the very best in the field, and they cover the most important topics for today's research and policy applications. Individual chapters contain sound, readable, well referenced explanations of each topic's history and current status. I cannot think of a better place to start for anyone wanting to become current in the field or in any of its parts.' - Kenneth Small, University of California-Irvine, US
. This paper studies the price-location equilibrium of duopolists supplying differentiated goods and competing in a spatial market with elastic demand. We show that a price-location equilibrium exists under all three pricing policies traditionally considered by the literature: f.o.b. mill, uniform delivered, and spatially discriminatory pricing. We also show that firms always cluster at the market center. The second part of the paper studies the endogenous choice of pricing policy. A surprising feature of the resulting equilibrium is asymmetry. The greater the extent to which the goods are substitutes, the more likely is it that one firm will choose f.o.b. pricing and the other price discrimination. Finally, the welfare consequences of the analysis show some interesting trade-offs.
Abstract Most existing studies examine the home market effect (HME) in a framework with immobile labour as the only production factor and the assumption of a freely traded homogeneous good is known to be crucial for the HME to emerge. This study explores the HME in the presence of mobile capital by use of a footloose capital model allowing for positive transport costs of the homogeneous good. The mobile capital generates a channel to offset the trade imbalance of a country. As a result, the HME always appears for arbitrary transport costs in both sectors of differentiated and homogeneous goods.
La plup art des travaux existants étudient l’effet du marché domestique dans un cadre d’analyse où le travail immobile est le seul facteur de production et où le postulat d’un bien homogène librement échangé est considéré comme un élément crucial pour que l’effet du marché domestique émerge. Ce texte explore le phénomène dans le cas où le capital est mobile et où on utilise un modèle de capital libre comme l’air avec coûts de transport positifs pour le bien homogène. Le capital mobile engendre un canal pour compenser le déséquilibre commercial d’un pays. En conséquence, l’effet du pays domestique apparaît toujours pour des coûts de transport arbitraires dans les secteurs des biens différenciés ou homogènes.
In a model with two countries of different size, we examine the effects of a fall in trade costs on firms' location, on their number of plants, on their production and on regional production and welfare. The possibility to run several plants reduces the strength of the home market effect. Regional production and welfare may move non‐monotonically with trade costs. We extend the model to endogenize country sizes. We show that there exists a continuum of equilibria with multinational firms and that a rent can be taxed by governments. We precisely identify how different parameters affect the results.
This paper investigates the impact of progressive trade openness on the formation of entrepreneurship in a two-country occupation choice model with monopolistic competition. We show that trade opening gives rise to a non-monotonic process of international specialization, in which the share of entrepreneurial firms in the large (small) country first increases (decreases) and then decreases (increases), with the global economy exhibiting first deindustrialization and then reindustrialization.
This paper focuses on the estimation of three distance-related effects on outward FDI. (1) Distance harms vertical multinationals,
since they engage in trade. (2) It makes non-trading multinationals better off than exporters. (3) This positive effect on
horizontal FDI is expected to rise with bilateral parent and host market size. The use of panel data and related econometric
methods is highly recommended to avoid parameter bias from endogenous, unobserved, time-invariant effects. A unified estimation
approach to assess all three hypotheses then has to rely on instrumental variable techniques for generalized least-squares
methods. In the empirical analysis of 1989-1999 bilateral US outward FDI stocks at the industry level, it is shown that testing
and accounting for autocorrelation is extremely important for parameter inference. In sum, the paper lends strong support
to the theory of horizontally organized multinationals as outlined in Markusen and Venables (J Int Econ 52(2):209–234).
The result of this paper is to suggest that the Koopmans-Beckmann conclusion quoted earlier depends crucially on the indivisibility assumed in their model.
But the efficiency of spatial competition is still an open question. It is possible that the introduction of further complications in this model would impair the efficiency of spatial competition. Possible complications are the introduction of a demand side, greater diversity of intermediate and final goods, factor substitution, and diversity of destinations for final goods. A model in which final goods were shipped to a household sector whose locations were determined by the model would embody many of these complications. And it would be valuable to examine the efficiency of spatial competition in such a model.
There are still important problems yet to be solved concerning the efficiency of spatial markets.
This paper studies a (one-dimensional) spatial duopoly model with an endogenous residential structure. Depending on the primitives of the model, we can observe one of the following urban configurations: (i) if the area under study is small enough, the two firms locate at the center and the residential pattern is that of a monocentric city; (ii) if the area is sufficiently large, the firms locate separately with a residential pattern of a bicentric city; (iii) if the area is very large, the two firms and residential patterns are completely separated, thus corresponding to two distinct monocentric cities. Although we consider the case in which two retail firms compete for consumers, the model can be reinterpreted, mutatis mutandis, as two manufacturing firms competing for workers.
The paper develops an analytically solvable model of new economic geography in which agglomeration of firms is caused by workers' investment in the acquisition of skills. Skilled workers earn high wages and have a large demand for goods. Since firms are attracted towards the demand, they locate at proximity of skilled workers. More workers invest in the acquisition of skills when more firms ask for these skills. Consequently, partial or full agglomeration of firms may be the location equilibrium. We also show that a reduction in transport costs increases the regional governments' incentives to subsidize the acquisition of skills.
We show how the spatial duopoly proposed by Launhardt in 1885, where firms have access to different transportation technologies, allows one to model in a simple and elegant way the two major types of product differentiation, i.e. horizontal and vertical. We consider the cases where firms are located near the market end points or near the market center. Launhardt's analysis of price determination is then extended by allowing firms to choose strategically their transportation rates. Subgame perfect Nash equilibria involve minimum (maximum) vertical product differentiation when horizontal product differentiation is large (small) enough.
Although transport costs are a key-ingredient of New Economic Geography, the transport sector is usually abstracted away from the analysis. Put differently, freight rates are taken as parametric and are not set by the market. This paper studies the relationships between transport costs, industry location, and welfare when freight rates are set by profit-maximizing carriers. We show that the demand for transport services becomes less elastic as the degree of spatial agglomeration rises, which increases carriers' market power and allows them to charge higher markups. Once it is recognized that firms and consumers are free to relocate in response to changes in transport costs, an increasing number of carriers, falling fixed or marginal costs in transportation, or both, trigger a gradual agglomeration of industry. In the long run, this leads to consumer welfare losses (and to aggregate welfare losses under free entry), with more inequality across agents living in different regions.
Highlighting market-size effects, the new economic geography has enriched our understanding of the functioning of the space economy. Contrary to its importance in practice, land use for production has received no attention in the branches of the economy, on which the new economic geography puts its focus: goods and services produced under increasing returns. We develop a simple general equilibrium model, an extension of the model by Helpman (1998), in which the increasing returns sector uses land in addition to labor. We identify a sharp contrast: with land use for production, a bell-shaped curve of spatial development can emerge. Such a curve is ruled out, however, if land is used for housing only. In contrast to common explanations for the bell-shaped curve which assume that part of the workforce is immobile, our approach builds on the insight that, ultimately, there is only one immobile resource, land.
Since Marshall [Principles of Economics (1890) MacMillan, London], it has been common for economists to model knowledge transfers as exogenous spillovers. However, there are many instances of knowledge transfers that are deliberate and reciprocal. This paper models these endogenous knowledge transfers and shows that endogenous knowledge barter is fundamentally different than exogenous spillovers. Holding city size fixed, we show that knowledge transfers may arise as a kind of barter when the value of knowledge is verifiable ex ante. Knowledge barter can also take place when the value of the knowledge transferred is verifiable only ex post if the interaction is repeated and if discount rates are not too high. However, the sustainability of knowledge barter depends crucially on city size. When city size is large, it is easier for an agent who withholds knowledge to go unpunished. This means that the sustainable level of knowledge barter is smaller in a large city. This result suggests that the knowledge-agglomeration relationship is non-monotonic. The loss of cooperative knowledge exchange that occurs as city size grows can be a limit to optimum and equilibrium city sizes.
In modern economies, the amount of profits distributed to shareholders is far from being negligible. We show that the way they are distributed among agents matters for the space-economy. For example, the existence of mobile rentiers is sufficient to make the symmetric configuration unstable for all transport cost values and to allow for the partial agglomeration of firms. Obviously, to account for profits and for their distribution, the assumption of free entry must be abandoned. So doing, we ignore fixed costs and show that it is the combination of imperfect competition and firms' indivisibility that matters for the formation of agglomeration in economic geography.
Consider a two-stage non-cooperative Cournot game with location choice involving n ⩾ 2 competing firms. There are spatially contiguous markets along the interval [0,1] with relative size of the markets described by a continuous density function φ(x). The demand function for each individual consumer is the same in each market. Each firm first selects the location of its facility and then selects the quantities to supply to the markets, so as to maximize its profit. Earlier works on Cournot competition in spatial models have shown, assuming that the consumers are distributed uniformly over the markets, that firms typically tend toward central agglomeration. This paper extends the previous work by establishing the robustness of the agglomeration equilibrium to a broad class of density functions. Derived here are conditions under which: (i) agglomeration of all n firms is an equilibrium, (ii) agglomeration of duopolists is the only equilibrium, and (iii) duopolists exhibit a dispersed equilibrium. Examples of partial agglomeration are also constructed.
We investigate the importance of market size as a determinant for industrial location patterns. In order to focus on a broad range of sectors, including services, both traded and non-traded goods are taken into consideration. In our model, traded goods industries always exhibit a ‘home market effect’ (HME), whereas the existence of such an effect for non-traded goods crucially hinges on the degree of product differentiation. High degrees of product differentiation generally support a HME, whereas a reverse HME may arise when products are sufficiently close substitutes. Our results are in accord with the observed existence of a market size dependent ‘functional hierarchy’, both within and between countries.
Several recent papers in the literature have reformulated the nature of equilibrium in Tiebout models by assuming an exogenous number ol communities, inflexible community boundaries, and in particular inactive landowners and developers. This paper argues that these assumptions are unwarranted and result in indeterminate solutions and incorrect analyses. Determinate long-run solutions require equilibrium in intercommunity land markets, which in turn require giving landowners and/or entrepreneurial developers an active role in the models. The role of politics in these models and its juxtaposition with entrepreneurial activities are also analyzed.
In a square central business district (CBD), with rectilinear (east-west and north-south) travel, production is assumed to require face-to-face transactions between firms. Each firm's locational decision therefore reflects travel costs between that location and all other CBD locations. The assumption that firms are uniformly distributed permits an analytical solution: rent contours are circular and office rent declines as the square of the radial distance from the center. Thus, in contrast to travel-only-to-the-center models, the rent function is concave from below; this property is shown to hold for arbitrary firm distributions. Endogenous firm distributions, investigated numerically, generate nearly circular rent contours.
I. Introduction, 347. — II. Production functions and producer equilibrium, 352. — III. Demand functions and supply of labor,
356. — IV. Equilibrium under laissez-faire, 358. — V. Ideal output, 362. — VI. Taxes, bounties, and optimality rules, 366.
— VII. Analysis in terms of consumers' surplus, 373. — VIII. Dynamic stability of the adjustment process, 381.
In this paper, we combine the monopolistic competition model of Fujita (1988) with the variable density model by Tabuchi (1986), Liu (1988) and Grimaud (1989), and develop a monopolistic competition model of spatial agglomeration with variable density. We compare the results of the present paper with those of previous work, and show that some previous results carried over to our generalized model with variable density.
In order to examine the impacts of market size on entrepreneurship, we estimate a monopolistic competition model that involves entrepreneurial decision by using data on Japanese prefectures. Our results show that a larger market size measured by the population density leads to higher incentive of people to become entrepreneurs. a 10 percent increase in the population density increases the share of people who wish to become entrepreneurs by 2 percent. In contrast, the self-employment ratio is lower in prefectures with higher population density, which suggests that the market size has different impacts on the entrepreneurship in different stages.
This paper shows that the mathematical structure of the most widely used New Economic Geography models is identical, irrespective of the underlying agglomeration mechanism assumed (factor migration, input-output linkages, endogenous capital accumulation). This enables us to provide analytical proofs to four important and related results in the field. First, standard models display at most two interior steady states beyond the symmetric one. Second, when interior, asymmetric steady-states exist they are unstable. Third, location displays hysteresis. Finally, with forward looking agents a shock to expectations might trigger an equilibrium switch. This paper also stresses the empirical implications of the most important results derived in this study. Copyright 2005, Oxford University Press.
Did living standards stagnate before the Industrial Revolution? Traditional real-wage indices typically show broadly constant living standards before 1800. In this paper, we show that living standards rose substantially, but surreptitiously because of the growing availability of new goods. Colonial luxuries such as tea, coffee, and sugar transformed European diets after the discovery of America and the rounding of the Cape of Good Hope. These goods became household items in many countries by the end of the 18th century. We use the Greenwood-Kopecky (2009) method to calculate welfare gains based on data about price changes and the rate of adoption of new colonial goods. Our results suggest that by 1850, the average Englishman would have been willing to forego 15% or more of his income in order to maintain access to sugar and tea alone. These findings are robust to a wide range of alternative assumptions, data series, and valuation methods.
The purpose of this paper is to provide a rational for the agglomeration of firms and households over a linear space. A state of comprehensive spatial interdependence is obtained by assuming that every household patronizes several firms. Within this context, supply follows the theory of spatial competition generalized to allow for an endogenous demand structure; and demand follows the tradition of urban economics generalized to allow for an endogenous supply structure. Agglomeration emerges through the interplay between spatial boundaries, trip dispersion, and the existence of positve profits.
Economies of agglomeration as a rationale for the formation of central business district of a city is examined. In a simultaneous location problem of firms and workers on a line segment, a locational interaction effect among firms is introduced. As an optimal solution to the cost minimization problem, a locational pattern is obtained in which the outermost zone is occupied by workers, the middle zone by firms, and the innermost zone by both workers and firms.
The structure of the optimal spatial pattern of production is studied when there are interdependencies among production units which can be described by a Leontief technology, and when there is a single marketplace of final demand, the CBD. Transportation cost is proportional to distance. It is shown that the various goods are produced in rings which can be ranked by distance from the CBD independently of the levels of final demand. Furthermore shipment of goods for meeting intermediate and final demand can only be in the direction of the CBD and no shipment of goods towards the periphery can occur. A finite algorithm is given for the construction of the optimal pattern and for determining a system of f.o.b. prices and land rents which sustain it as a competitive equilibrium.
Urban economists and location theorists have long employed land use models with a continuum of agents distributed over a continuum of locations. However, these continous models have been criticized on behavioral grounds in that individual households can consume only zero amounts of land in equilibrium. Hence the central purpose of this paper is to propose an alternative interpretation of these continous models as limiting approximations of discrete population models. In particular, it is shown that for large population sizes, the population distributions of the classical continuous model uniformly approximate the equilibrium population distributions generated by an appropriately defined class of discrete population models.
We consider a model of competition in which products may differ in both location and brand specification. We assume linear transportation costs in the geographic space and quadratic costs of deviation from the most preferred product in the brand space. Brand specifications are given but prices and locations are variable. It is shown that firms agglomerate at the market center when product differentiation is large enough. For lower degrees of differentiation, the central agglomeration is proved to be an equilibrium when locations are restricted to be in the neighborhood of the market center.
This paper presents a general result on the existence of competitive equilibria for residential land markets in continuous space. Following standard residential land-use theory, such markets are postulated to involve finitely many types of household continua bidding for land within a continuous finite-dimensional space. In contrast to the standard approach of defining an excess-demand correspondence on a price space, the problem here is reformulated in terms of a ‘population excess-supply correspondence’ on a utility space. This approach allows the analysis to be carried out entirely in terms of finite-dimensional methods, and in particular, allows standard types of fixed-point arguments to be employed.
Models of economies either of urban areas or with local public goods often involve the use of a continuum of consumers along with the use of a commodity called land; each consumer generally owns a parcel of land of positive area. The purpose of the present study is to show that such models are internally inconsistent (independent of the other assumptions employed) in that only countably many consumers can own parcels of land of non-zero area if land lies in a Euclidean space. This result applies, in particular, to monocentric city models. Moreover, it is shown that the standard justification for the use of economies with an infinity of agents, that they approximate large economies with a finite number of consumers, does not necessarily apply in the case of economies with land and a continuum of consumers. A model where land is represented by subsets of 2 is presented as an alternative.
This paper deals with the determination of the number and locations of facilities in which a public service is made available to consumers. The solutions obtained by planning and voting are characterized and compared for both a benefit taxation, based on consumers' locations, and an income taxation.
We consider the core-periphery model [P. Krugman, Increasing returns and economic geography, Journal of Political Economy 199 (1) (1991) 483–499]. The nature and stability of the possible steady states of the model have been made progressively precise; [M. Fujita, P. Krugman, A. Venables, The Spatial Economy. Cities, Regions and International Trade, MIT Press, Cambridge, 1999; R. Baldwin, R. Forslid, Ph. Martin, G. Ottaviano, F. Robert-Nicoud, Economic Geography and Public Policy, Princeton Univ. Press, 2003]. In that model as well as in all the new economic geography models that have been derived from it, the short-run (instantaneous) equilibrium is implicitly determined by the current labor distribution across regions. The numerical computations used so far to determine the short-run equilibrium, tend to suggest its existence. In this paper, an existence and uniqueness proof of short-run equilibrium is provided.
This paper explores the relationship between aggregate land rents and aggregate transport costs for land markets in which locations differ solely in terms of accessibility. That there exists a relationship between land rents and transport costs has been recognized at least since the time of von Thunen. The precise relationship between the two is, however, not generally well-understood. For instance, until quite recently it was considered correct to estimate the benefits from a transport improvement by the induced change in aggregate land rents at those locations where travel costs are reduced. This procedure can be shown to be correct only in very special circumstances. This paper presents a very general characterization of the relationship between aggregate land rents and aggregate transport costs. In some special cases, the relationship turns out to be remarkably simple: for a circular city with linear transport costs, aggregate transport costs are precisely twice aggregate land rents, independent of the distribution of tastes or income; for a linear city with linear transport costs, aggregate transport costs are equal to aggregate land rents. One corollary of our general analysis is that aggregate land rents may stay the same or actually fall in response to a transport improvement which makes everyone better off. In the first section we consider a simple example. The second derives the basic theorems of the paper, while the third examines their implications for the relationship between the benefits from a transport improvement and the change in aggregate land rents induced by the improvement. And in the fourth section, we examine the extent to which the theorems of section II generalize.
When do cities specialize in production and when do they diversify? When do both specialized cities and diversified cities coexist? What determines the size and number of cities of different types in an economy? These questions are addressed in a general equilibrium model of a closed economy consisting of a system of cities. The economy produces two goods which are traded within the system at no transportation costs. In the context of this model the factor which leads to the formation of specialized cities is internal scale economies due to the existence of fixed cost in production, whereas the reason for the formation of diversified cities is the existence of economies of joint production (i.e., economies of scope). The model presented generates three possible equilibrium configurations: (1) pure specialization, in which each city specialized in the production of one good; (2) pure diversification, in which all cities in the economy produce both goods; (3) mixed system, in which specialized and diversified cities coexist in the economy. The conditions under which each configuration emerges are identified. Thus the model represents an explanation of urban hierarchy in spatial economies.
A model of urban spatial structure for a linear and closed monocentric city is formulated by allowing the presence of randomly distributed idiosyncratic tastes for location in an otherwise uniform household population. Land use equilibrium conditions are shown to have a stochastic representation which depends on the distribution of the idiosyncratic tastes over the population of households. A special case in which the multinomial logit model gives the representative household's locational choice probability is derived and examined for a logarithmic utility function. It is shown that the stochastic equilibrium can also be obtained as the solution of a welfare optimum problem, either by maximizing total social welfare (primal) or by minimizing total opportunity cost (dual). Either formulation gives the equilibrium allocations and associated decentralizing land prices. Some comparative statics analysis is undertaken to show that while most results are like those of the Alonso-Mills-Muth model, increasing taste heterogeneity decentralizes the linear urban form, “flattening” the rent and population density gradients. The Alonso-Mills-Muth solution is obtained as an asymptotically limiting case which provides an upper bound on the “steepness” of the rent and population density gradients and a lower bound on the length of the linear city and the welfare level of the representative consumer.
This paper considers the role of developers in the formation of cities. Existing treatment of the location of economic activity between cities either ignore developers entirely (e.g. Stiglitz 1977) or endow them with limitless power (e.g., Henderson 1988). Reality lies somewhere in between; most cities have been partly shaped by the actions of developers, but even the largest developers are limited. In this paper organizational limits to developers are discussed, and a model of a system of cities is presented in which a land assembly problem may prevent developers from acquiring efficient amounts of land. We examine the consequences of land assembly for land prices, city sizes, and infrastructure provision. We show that limited developers may not attain an efficient allocation of resources.
Product heterogeneity is introduced into the context of spatial price discrimination. Many of the strong properties of the
standard homogeneous goods case (which are attained as a limit case here) are shown to be no longer valid. In particular,
the social optimum is no longer sustainable as a market equilibrium unless products are either identical or else very different.
A simple noncooperative equilibrium model is developed in which firms react, by choice of location, to consumers' search for their most preferred among several substitutable alternatives. Conditions are given under which the noncooperative behavior of firms in equilibrium always leads to some spatial concentration of all firms in one marketplace. The latter is shown to be excessive from the firm's point of view. Thus a spatial decentralization of retailing activities may lead to an increase in the firms' profits and to welfare improvement. -from Author