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Self-Defeating Regional Concentration

Author

Listed:
  • Kiminori Matsuyama
  • Takaaki Takahashi
Abstract
We present a simple model of a two-region economy in which undesirable concentration may occur. With freedom to choose where to live, individuals in this economy concentrate into one region in their pursuit of better life, and end up becoming worse off. We characterize the conditions under which such self-defeating concentration occurs in terms of a few key parameters, such as economies of scale in nontradeable service sectors, regional differences in labor productivity in tradeable goods sectors, and substitutability of tradeable goods in consumption.

Suggested Citation

  • Kiminori Matsuyama & Takaaki Takahashi, 1993. "Self-Defeating Regional Concentration," NBER Working Papers 4484, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:4484
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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