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Urban agglomeration and heterogeneous firms: a synthesis of Helpman and Melitz

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  • Yiming Zhou

    (Harbin Institute of Technology)

Abstract

This study revisits the seminal findings by Helpman in 1998 in a more comprehensive setup with Melitz-type firm heterogeneity. Our model features how a change in firm heterogeneity affects agglomeration in an urban-space economy. We contribute to the literature by analytically giving explicit solutions for the threshold values of the housing preference and transport costs that are crucial in determining the equilibrium. We also obtain new findings in the case of asymmetric housing stocks. Our results provide alternative explanations to stylized facts such as “ghost cities” in countries undertaking high-speed urbanization and real estate development.

Suggested Citation

  • Yiming Zhou, 2020. "Urban agglomeration and heterogeneous firms: a synthesis of Helpman and Melitz," Journal of Economics, Springer, vol. 130(3), pages 275-296, August.
    • Handle: RePEc:kap:jeczfn:v:130:y:2020:i:3:d:10.1007_s00712-020-00698-5
    DOI: 10.1007/s00712-020-00698-5
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    More about this item

    Keywords

    Urban agglomeration; Housing congestion; Firm heterogeneity;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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