A model of economic geography with demand‐pull and congestion costs*

Olga Alonso‐Villar
Authors registered in the RePEc Author Service: Olga Alonso-Villar

Papers in Regional Science, 2008, vol. 87, issue 2, 261-276

Abstract: Abstract. This article proposes a simple model of economic geography by which to derive analytical results when jointly considering two centrifugal forces – congestion costs together with the pull demand effect – within the Dixit‐Stiglitz‐Iceberg framework. In this vein, we develop a unified model with labour mobility that combines some of the features of Tabuchi (1998) with those of Forslid and Ottaviano (2003). We analytically show that when considering the effects of congestion costs, the dispersion of economic activity is possible not only at high, but also at low transport costs. This result corroborates previous numerical simulations conducted by Tabuchi (1998). Resumen. Este artículo propone un modelo sencillo de geografía económica con el que obtener resultados analíticos cuando se consideraran conjuntamente dos fuerzas centrífugas –los costos de congestión y el efecto demanda– dentro del marco Dixit‐Stiglitz‐Iceberg. Asimismo, desarrollamos un modelo unificado, con movilidad laboral, que combina algunas de las características de Tabuchi (1998) con las de Forslid y Ottaviano (2003). Analíticamente mostramos que cuando se consideraran los efectos de los costos de congestión, la dispersión de la actividad económica es posible no solamente si los costos de transporte son elevados sino también si éstos son bajos. Este resultado corrobora simulaciones numéricas previas realizadas por Tabuchi (1998).

Date: 2008
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Citations: View citations in EconPapers (11)

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https://doi.org/10.1111/j.1435-5957.2007.00160.x

Related works:
Working Paper: A Model of Economic Geography with Demand Pull and Congestion Costs (2010)
Working Paper: A model of economic geography with demand pull and congestion costs (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:87:y:2008:i:2:p:261-276

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