IDEAS home Printed from https://ideas.repec.org/p/ivi/wpasad/2003-04.html
   My bibliography  Save this paper

Increasing Returns And Heterogeneity In A Spatial Economy

Author

Listed:
  • Pascal Mossay

    (Universidad de Alicante)

Abstract

We study a general equilibrium model of global trade and local migration in a continuous geographical space. Trade is based on the Dixit-Stiglitz model of monopolistic competition. Migration is modelled as a local interaction decision process. Incentives for migration are of two types: homogeneous incentives of the group, associated with the identity of taste for higher utility levels, and heterogeneous incentives, due to idiosyncrasies in location taste. The impact of migration on the regional structure is twofold. First, when driven by utility differentials, it contributes to agglomeration because of the presence of increasing returns. Second, when reflecting heterogeneous individual choices, it fosters regional convergence. Furthermore, the size of agglomerations, when they occur, increases with the taste for variety and the proportion of the manufacturing population, and decreases with transport costs.

Suggested Citation

  • Pascal Mossay, 2003. "Increasing Returns And Heterogeneity In A Spatial Economy," Working Papers. Serie AD 2003-04, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    • Handle: RePEc:ivi:wpasad:2003-04
    as

    Download full text from publisher

    File URL: http://www.ivie.es/downloads/docs/wpasad/wpasad-2003-04.pdf
    File Function: Fisrt version / Primera version, 2003
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, April.
    2. Papageorgiou, Yorgo Y & Smith, Terrence R, 1983. "Agglomeration as Local Instability of Spatially Uniform Steady-States," Econometrica, Econometric Society, vol. 51(4), pages 1109-1119, July.
    3. Sonnenschein, Hugo, 1982. "Price Dynamics Based on the Adjustment of Firms," American Economic Review, American Economic Association, vol. 72(5), pages 1088-1096, December.
    4. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    5. Greenberg, Joseph, 1983. "Local public goods with mobility: Existence and optimality of a general equilibrium," Journal of Economic Theory, Elsevier, vol. 30(1), pages 17-33, June.
    6. Krugman, Paul, 1993. "On the number and location of cities," European Economic Review, Elsevier, vol. 37(2-3), pages 293-298, April.
    7. Mansoorian, Arman & Myers, Gordon M., 1997. "On the consequences of government objectives for economies with mobile populations," Journal of Public Economics, Elsevier, vol. 63(2), pages 265-281, January.
    8. W. A. V. Clark, 1985. "Human Migration," Book Chapters, in: Grant I. Thrall (ed.),Scientific Geography, pages 51, Regional Research Institute, West Virginia University.
    9. ANDERSON, Simon P. & de PALMA, André & THISSE, Jacques-François, 1992. "Interpretations of the logit discrete choice models and the theory of product differentiation," LIDAM Reprints CORE 1017, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    10. repec:brs:ecchap:12 is not listed on IDEAS
    11. Paul Krugman & Anthony J. Venables, 1995. "The Seamless World: A Spatial Model of International Specialization," NBER Working Papers 5220, National Bureau of Economic Research, Inc.
    12. Sonnenschein, Hugo, 1981. "Price dynamics and the disappearance of short-run profits : An example," Journal of Mathematical Economics, Elsevier, vol. 8(2), pages 201-204, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Albeverio, Sergio & Mastrogiacomo, Elisa, 2022. "Large deviation principle for spatial economic growth model on networks," Journal of Mathematical Economics, Elsevier, vol. 103(C).
    2. Emmanuelle Augeraud-Véron & Raouf Boucekkine & Vladimir Veliov, 2019. "Distributed Optimal Control Models in Environmental Economics: A Review," AMSE Working Papers 1902, Aix-Marseille School of Economics, France.
    3. Picard, Pierre M. & Tabuchi, Takatoshi, 2013. "On microfoundations of the city," Journal of Economic Theory, Elsevier, vol. 148(6), pages 2561-2582.
    4. Akamatsu, Takashi & Takayama, Yuki, 2009. "A Simplified Approach to Analyzing Multi-regional Core-Periphery Models," MPRA Paper 21739, University Library of Munich, Germany, revised 29 Oct 2009.
    5. Pierre M. Picard & Takatoshi Tabuchi, 2010. "City with forward and backward linkages," Working Papers 2010/34, Institut d'Economia de Barcelona (IEB).
    6. Pierre Picard & Takatoshi Tabuchi, 2010. "Self-organized agglomerations and transport costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(3), pages 565-589, March.
    7. Mossay, P. & Picard, P.M., 2011. "On spatial equilibria in a social interaction model," Journal of Economic Theory, Elsevier, vol. 146(6), pages 2455-2477.
    8. PICARD, Pierre & TABUCHI, Takatoshi, 2003. "Natural agglomeration," LIDAM Discussion Papers CORE 2003101, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. Raouf Boucekkine & Giorgio Fabbri & Salvatore Federico & Fausto Gozzi, 2019. "Growth and agglomeration in the heterogeneous space: a generalized AK approach," Journal of Economic Geography, Oxford University Press, vol. 19(6), pages 1287-1318.
    10. Kensuke Ohtake & Atsushi Yagi, 2022. "Pointwise agglomeration in continuous racetrack model," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(2), pages 211-235, May.
    11. Akamatsu, Takashi & Takayama, Yuki & Ikeda, Kiyohiro, 2012. "Spatial discounting, Fourier, and racetrack economy: A recipe for the analysis of spatial agglomeration models," Journal of Economic Dynamics and Control, Elsevier, vol. 36(11), pages 1729-1759.
    12. Mossay, Pascal, 2013. "A theory of rational spatial agglomerations," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 385-394.
    13. Benteng Zou & Carmen Camacho, 2004. "The spatial Solow model," Economics Bulletin, AccessEcon, vol. 18(2), pages 1-11.
    14. Takashi Akamatsu & Tomoya Mori & Yuki Takayama, 2015. "Agglomerations in a multi-region economy: Poly-centric versus mono-centric patterns," KIER Working Papers 929, Kyoto University, Institute of Economic Research.
    15. Boucekkine, Raouf & Camacho, Carmen & Zou, Benteng, 2009. "Bridging The Gap Between Growth Theory And The New Economic Geography: The Spatial Ramsey Model," Macroeconomic Dynamics, Cambridge University Press, vol. 13(1), pages 20-45, February.
    16. Sofia B. S. D. Castro & João Correia-da-Silva & José M. Gaspar, 2022. "Economic geography meets Hotelling: the home-sweet-home effect," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 183-209, February.
    17. Tabata, Minoru & Eshima, Nobuoki & Sakai, Yuusuke, 2015. "Existence and computation of solutions to the initial value problem for the replicator equation of evolutionary game defined by the Dixit–Stiglitz–Krugman model in an urban setting: Concentration of w," Applied Mathematics and Computation, Elsevier, vol. 254(C), pages 419-451.
    18. Camacho, Carmen & Zou, Benteng & Briani, Maya, 2008. "On the dynamics of capital accumulation across space," European Journal of Operational Research, Elsevier, vol. 186(2), pages 451-465, April.
    19. Pascal Mossay, 2004. "Spatial Stability," Working Papers. Serie AD 2004-47, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    20. José M. Gaspar, 2018. "A prospective review on New Economic Geography," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 237-272, September.
    21. Bragard, Jean & Mossay, Pascal, 2016. "Stability of a spatial model of social interactions," Chaos, Solitons & Fractals, Elsevier, vol. 83(C), pages 140-146.
    22. Ohtake, Kensuke, 2023. "Agglomeration and welfare of the Krugman model in a continuous space," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 137-142.
    23. Pierre M. Picard & Takatoshi Tabuchi, 2010. "City with forward and backward linkages," Working Papers 2010/34, Institut d'Economia de Barcelona (IEB).
    24. Mossay, Pascal, 2006. "Stability of spatial adjustments across local exchange economies," Regional Science and Urban Economics, Elsevier, vol. 36(4), pages 431-449, July.

    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. Mossay, Pascal, 2003. "Increasing returns and heterogeneity in a spatial economy," Regional Science and Urban Economics, Elsevier, vol. 33(4), pages 419-444, July.
    2. Mossay, Pascal, 2013. "A theory of rational spatial agglomerations," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 385-394.
    3. Pierre Picard & Takatoshi Tabuchi, 2010. "Self-organized agglomerations and transport costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(3), pages 565-589, March.
    4. Gilles Duranton, 1997. "La nouvelle économie géographique : agglomération et dispersion," Économie et Prévision, Programme National Persée, vol. 131(5), pages 1-24.
    5. Marcus Berliant & Yves Zenou, 2014. "Labor Differentiation and Agglomeration in General Equilibrium," International Regional Science Review, , vol. 37(1), pages 36-65, January.
    6. Tabuchi, Takatoshi & Thisse, Jacques-Francois, 2002. "Taste heterogeneity, labor mobility and economic geography," Journal of Development Economics, Elsevier, vol. 69(1), pages 155-177, October.
    7. Pascal Mossay, 2004. "Spatial Stability," Working Papers. Serie AD 2004-47, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    8. Mossay, Pascal, 2006. "Stability of spatial adjustments across local exchange economies," Regional Science and Urban Economics, Elsevier, vol. 36(4), pages 431-449, July.
    9. Boiscuvier, Éléonore, 2001. "Innovation, intégration et développement régional," L'Actualité Economique, Société Canadienne de Science Economique, vol. 77(2), pages 255-280, juin.
    10. Berliant, Marcus & Konishi, Hideo, 2000. "The endogenous formation of a city: population agglomeration and marketplaces in a location-specific production economy," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 289-324, May.
    11. Minoru Tabata & Nobuoki Eshima, 2023. "Approximation of a Continuous Core-periphery Model by Core-periphery Models with a Large Number of Small Regions," Networks and Spatial Economics, Springer, vol. 23(1), pages 223-283, March.
    12. Braunerhjelm, Pontus & Thulin, Per, 2005. "The trade-off between agglomeration forces and relative costs: EU versus the “world” Evidence from firm-level location data 1974-1998," Working Paper Series in Economics and Institutions of Innovation 30, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    13. Pontus Braunerhjelm & Per Thulin, 2009. "Agglomeration, Relative Wage Costs and Foreign Direct Investment—Evidence from Swedish MNCs 1974–1998," Journal of Industry, Competition and Trade, Springer, vol. 9(3), pages 197-217, September.
    14. Boucekkine, Raouf & Camacho, Carmen & Zou, Benteng, 2009. "Bridging The Gap Between Growth Theory And The New Economic Geography: The Spatial Ramsey Model," Macroeconomic Dynamics, Cambridge University Press, vol. 13(1), pages 20-45, February.
    15. F Medda & P Nijkamp & P Rietveld, 1999. "Urban Industrial Relocation: The Theory of Edge Cities," Environment and Planning B, , vol. 26(5), pages 751-761, October.
    16. Giulio Bottazzi & Giovanni Dosi & Giorgio Fagiolo, 2001. "On the Ubiquitous Nature of the Agglomeration Economies and their Diverse Determinants: Some Notes," LEM Papers Series 2001/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    17. Giulio Bottazzi & Giorgio Fagiolo & Giovanni Dosi, 2002. "Mapping Sectoral Patterns of Technological Accumulation into the Geography of Corporate Locations. A Simple Model and Some Promising Evidence," LEM Papers Series 2002/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    18. Paul Krugman, 1998. "Space: The Final Frontier," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 161-174, Spring.
    19. Minoru Osawa & Takashi Akamatsu & Yuki Takayama, 2017. "Harris And Wilson (1978) Model Revisited: The Spatial Period‐Doubling Cascade In An Urban Retail Model," Journal of Regional Science, Wiley Blackwell, vol. 57(3), pages 442-466, June.
    20. Satu Nivalainen, 2003. "Who move to rural areas? Micro Evidence from Finland," ERSA conference papers ersa03p214, European Regional Science Association.

    More about this item

    Keywords

    Heterogeneity; agglomeration; dispersion; monopolistic competition;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    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:ivi:wpasad:2003-04. 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: Departamento de Edición (email available below). General contact details of provider: https://edirc.repec.org/data/ievages.html .

    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.