IDEAS home Printed from https://ideas.repec.org/a/bla/tvecsg/v100y2009i2p171-182.html
   My bibliography  Save this article

The Difference Between Bi‐Regional And Full Networks When Analysing Agglomeration Effects

Author

Listed:
  • MARK THISSEN
  • HANS HILBERS
  • PAUL VAN DE COEVERING

Abstract

Agglomeration economies explain why productivity increases as the size of agglomeration increases, and thereby partly explain the importance of location and space in economic development. Agglomeration economies are based on the distance between firms, labour and the market. Infrastructure investment can be a tool used by governments to affect this distance, where, in doing so, they induce agglomeration economies and increase economic growth. In this paper, we will discuss the importance of considering types of networks when analysing agglomeration economies using multiregional new economic geography (NEG)‐based spatial general equilibrium models. These models typically use abstract bi‐regional origin‐destination networks to describe the cost of transporting or commuting between regions. These abstract networks are like tunnels between regions and do not take into account the actual roads in real infrastructure networks used for transport and traffic between destinations. In other words, in real infrastructure networks, which we label full networks, people and goods move from one region to another via actual roads and possibly via third regions. In the empirical economic literature, there is a significant difference between the economic effect of changes in a bi‐regional origin‐destination network and the economic effect of changes in a full network. To date, no systematic explanation has been given for this difference in the size of the effects. Lack of an explanation for this difference may lead to confusion among policy‐makers who have to decide on infrastructure investment. In this methodological paper, we discuss the reason for this difference. We do not discuss the absolute size of the agglomeration effects, only the relative difference that exists when using different types of networks. In order to explain the difference, we introduce a methodology that translates the effects in a bi‐regional origin‐destination network into similar effects in a full network, making it possible to systematically compare the economic importance of all links (roads) in such a network. This is highly relevant to policy‐makers, who can now interpret the model results on a real full infrastructure network. We will also show the mathematical relationship between the importance of agglomeration economies on a link in a full network and the importance of agglomeration economies on a link in a bi‐regional origin‐destination network. Finally, the methodology is illustrated with a case study from the Netherlands.

Suggested Citation

  • Mark Thissen & Hans Hilbers & Paul Van De Coevering, 2009. "The Difference Between Bi‐Regional And Full Networks When Analysing Agglomeration Effects," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 100(2), pages 171-182, April.
    • Handle: RePEc:bla:tvecsg:v:100:y:2009:i:2:p:171-182
    DOI: 10.1111/j.1467-9663.2009.00527.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1467-9663.2009.00527.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1467-9663.2009.00527.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Venables, Anthony J, 1996. "Equilibrium Locations of Vertically Linked Industries," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 341-359, May.
    2. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    3. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
    4. Anthony J. Venables, 2007. "Evaluating Urban Transport Improvements: Cost-Benefit Analysis in the Presence of Agglomeration and Income Taxation," Journal of Transport Economics and Policy, University of Bath, vol. 41(2), pages 173-188, May.
    5. Thijs Knaap & Jan Oosterhaven & Lóri Tavasszy, 2001. "On the development of raem: The dutch spatial general equilibrium model and it's first application to a new railway link," ERSA conference papers ersa01p171, European Regional Science Association.
    6. Elhorst, J. Paul & Oosterhaven, Jan, 2008. "Integral Cost-Benefit Analysis of Maglev Rail Projects Under Market Imperfections," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 1(1), pages 65-87.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mark Thissen & Narisra Limtanakool & Hans Hilbers, 2011. "Road pricing and agglomeration economies: a new methodology to estimate indirect effects applied to the Netherlands," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(3), pages 543-567, December.
    2. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
    3. Stephen J. Redding, 2010. "The Empirics Of New Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 297-311, February.
    4. Bagoulla, Corinne & Péridy, Nicolas, 2011. "Market access and the other determinants of North–South manufacturing location choice: An application to the Euro-Mediterranean area," Economic Systems, Elsevier, vol. 35(4), pages 537-561.
    5. Karen Crabbé & Karolien De Bruyne, 2013. "Taxes, Agglomeration Rents and Location Decisions of Firms," De Economist, Springer, vol. 161(4), pages 421-446, December.
    6. Gianmarco I P Ottaviano & Jacques-François Thisse, 2005. "New Economic Geography: What about the N?," Environment and Planning A, , vol. 37(10), pages 1707-1725, October.
    7. Baldwin, Richard E. & Krugman, Paul, 2004. "Agglomeration, integration and tax harmonisation," European Economic Review, Elsevier, vol. 48(1), pages 1-23, February.
    8. Lenaerts, Bert & Allroggen, Florian & Malina, Robert, 2021. "The economic impact of aviation: A review on the role of market access," Journal of Air Transport Management, Elsevier, vol. 91(C).
    9. Andersson, Matts & Dehlin, Fredrik & Jörgensen, Peter & Pädam, Sirje, 2015. "Wider economic impacts of accessibility: a literature survey," Working papers in Transport Economics 2015:14, CTS - Centre for Transport Studies Stockholm (KTH and VTI).
    10. Toshiaki Takahashi & Hajime Takatsuka & Dao-Zhi Zeng, 2013. "Spatial inequality, globalization, and footloose capital," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 53(1), pages 213-238, May.
    11. Pflüger, Michael & Tabuchi, Takatoshi, 2010. "The size of regions with land use for production," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 481-489, November.
    12. Stefan Wrzaczek, 2014. "Social optimality in the constructed-capital model," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 22(1), pages 211-232, March.
    13. Lili Tan & Dao-Zhi Zeng, 2014. "Spatial inequality between developed and developing economies," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 229-248, June.
    14. Theodore Tsekeris & Klimis Vogiatzoglou, 2014. "Public infrastructure investments and regional specialization: empirical evidence from Greece," Regional Science Policy & Practice, Wiley Blackwell, vol. 6(3), pages 265-289, August.
    15. Edilberto Tiago de Almeida & Raul da Mota Silveira Neto & Roberta de Moraes Rocha, 2022. "Manufacturing location patterns in Brazil," Papers in Regional Science, Wiley Blackwell, vol. 101(4), pages 839-873, August.
    16. Maarten Bosker & Harry Garretsen, 2010. "Trade costs in empirical New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 485-511, August.
    17. Karolina Ekholm & Katariina Hakkala, 2007. "Location of R&D and High-Tech Production by Vertically Integrated Multinationals," Economic Journal, Royal Economic Society, vol. 117(518), pages 512-543, March.
    18. Kim, Ho Yeon, 2012. "Shrinking population and the urban hierarchy," IDE Discussion Papers 360, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    19. Brakman, Steven & Garretsen, Harry & Schramm, Marc, 2006. "Putting new economic geography to the test: Free-ness of trade and agglomeration in the EU regions," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 613-635, September.
    20. Nga Thi Viet Nguyen & Felipe F. Dizon, 2017. "The Geography of Welfare in Benin, Burkina Faso, Côte d'Ivoire, and Togo," World Bank Publications - Reports 27994, The World Bank Group.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:tvecsg:v:100:y:2009:i:2:p:171-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0040-747X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.