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How do All Roads Lead to Rome? The Story of Transportation Network Inducing Agglomeration

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  • Ahmed Saber Mahmud

    (Johns Hopkins University)

Abstract

The paper describes the formation of a rural-urban network in which urban areas decide to form links with other urban as well as rural regions. Furthermore, we illustrate how the presence of network can induce agglomeration . Urban areas are mainly production centers of manufacturing goods, and the rural regions that of agriculture. Both regions need to form a network to trade with one another. Network formation occurs in the presence of transportation and network formation costs. The equilibrium rural-urban network is formed when regions attempt to minimize transportation cost as well as the total cost of forming links in a network. The paper illustrates how network structure itself can create agglomeration apart from the processes described in the literature. Manufacturing firms locate to a single area to create a hub that has direct links to rural regions and rural-urban trade proceeds with minimum transportation costs and a minimum number of links.

Suggested Citation

  • Ahmed Saber Mahmud, 2021. "How do All Roads Lead to Rome? The Story of Transportation Network Inducing Agglomeration," Networks and Spatial Economics, Springer, vol. 21(2), pages 419-464, June.
    • Handle: RePEc:kap:netspa:v:21:y:2021:i:2:d:10.1007_s11067-021-09529-6
    DOI: 10.1007/s11067-021-09529-6
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    References listed on IDEAS

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    Keywords

    Agglomeration; Network formation;

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