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Resource effects in the Core-Periphery model

Author

Listed:
  • María Pilar Martínez-García

    (Facultad de Economía y Empresa. University of Murcia)

  • Jose Rodolfo Morales

    (Facultad de Economía y Empresa. University of Murcia)

Abstract

This paper developes an extension of Krugman’s (1991) Core-Periphery model, by considering the traditional sector as a competitive primary sector that makes use of a renewable natural resource. The natural resource can be consumed or used as a raw material in the industrial sector. Three results stand out. First, the dynamics of the resource and its use as a raw material give rise to new dispersion forces: the resource and the primary price index effects. Second, the pattern that arises reverts the usual stability behavior in core-prephery models. And third, different types of bifurcationsarise, resulting in different patterns of agglomeration-dispersion. In addition to transport costs, the productivity of the resource sector plays a key role in the bifurcation diagrams.

Suggested Citation

  • María Pilar Martínez-García & Jose Rodolfo Morales, 2016. "Resource effects in the Core-Periphery model," Gecomplexity Discussion Paper Series 201607, Action IS1104 "The EU in the new complex geography of economic systems: models, tools and policy evaluation", revised Jul 2016.
    • Handle: RePEc:cst:wpaper:201607
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    References listed on IDEAS

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    More about this item

    Keywords

    natural resources; new economic geography.;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F18 - International Economics - - Trade - - - Trade and Environment
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development

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