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Regional externalities in the dynamic system of three regions

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  • Jaakko Simonen

Abstract

. This article presents a theoretical model of the role of intra‐regional economies of scale and inter‐regional externalities across a three dimensional regional economy. Kubo's (1995) two‐dimensional analysis is extended to study the dynamic properties of the development of the three regions. We characterise dynamics and the stability of steady states, and show under what conditions the steady state is unique. Furthermore, we examine different regional development patterns both in cases of symmetric and asymmetric inter‐regional externalities. We show that the condition for even regional development in Kubo's model, i.e., that inter‐regional externalities are larger than intra‐regional economies of scale in each region, is not sufficient for even regional development in a three region model.

Suggested Citation

  • Jaakko Simonen, 2006. "Regional externalities in the dynamic system of three regions," Papers in Regional Science, Wiley Blackwell, vol. 85(3), pages 421-442, August.
    • Handle: RePEc:bla:presci:v:85:y:2006:i:3:p:421-442
    DOI: 10.1111/j.1435-5957.2006.00091.x
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    References listed on IDEAS

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    1. Caniels, Marjolelein & Verspagen, Bart, 1999. "The Effects of economic integration on regional growth, an evolutionary model," ERSA conference papers ersa99pa219, European Regional Science Association.
    2. Keller, Wolfgang, 2001. "The Geography and Channels of Diffusion at the World's Technology Frontier," Discussion Paper Series 26140, Hamburg Institute of International Economics.
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    Cited by:

    1. Wei‐Bin Zhang, 2008. "Growth and residential distribution with economic structure and amenity: A synthesis of Solow‐Uzawa's growth, Alonso's urban, and Muth's housing models," Papers in Regional Science, Wiley Blackwell, vol. 87(2), pages 277-303, June.
    2. Julián Ramajo & José Manuel Cordero & Miguel Ángel Márquez, 2017. "European regional efficiency and geographical externalities: a spatial nonparametric frontier analysis," Journal of Geographical Systems, Springer, vol. 19(4), pages 319-348, October.
    3. Miguel A. Márquez & Julián Ramajo & Geoffrey JD. Hewings, 2015. "Regional growth and spatial spillovers: Evidence from an SpVAR for the Spanish regions," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 1-18, November.
    4. Kristian Behrens & Frédéric Robert‐Nicoud, 2009. "Krugman's Papers in Regional Science: The 100 dollar bill on the sidewalk is gone and the 2008 Nobel Prize well‐deserved," Papers in Regional Science, Wiley Blackwell, vol. 88(2), pages 467-489, June.

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