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History versus Expectations in Economic Geography Reconsidered

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  • Oyama, Daisuke

Abstract

This paper studies global stability of spatial configurations in a dynamic two-region model with quadratic adjustment costs where rational migrants make migration decisions so as to maximize their discounted future utilities. A global analysis is conducted to show that, except for knife-edge cases with symmetric regions, there exists a unique spatial configuration that is absorbing and globally accessible whenever the degree of friction is sufficiently small, and such a configuration is characterized as the unique maximizer of the potential function of the underlying static model.

Suggested Citation

  • Oyama, Daisuke, 2006. "History versus Expectations in Economic Geography Reconsidered," MPRA Paper 9287, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9287
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    References listed on IDEAS

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    1. Kyoji Fukao & Roland Benabou, 1993. "History Versus Expectations: A Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(2), pages 535-542.
    2. Rikard Forslid & Gianmarco I.P. Ottaviano, 2003. "An analytically solvable core-periphery model," Journal of Economic Geography, Oxford University Press, vol. 3(3), pages 229-240, July.
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    5. 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.
    6. Ottaviano, Gianmarco I. P., 2001. "Monopolistic competition, trade, and endogenous spatial fluctuations," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 51-77, February.
    7. Kaneda, Mitsuhiro, 2003. "Policy designs in a dynamic model of infant industry protection," Journal of Development Economics, Elsevier, vol. 72(1), pages 91-115, October.
    8. Paul Krugman, 1991. "History versus Expectations," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(2), pages 651-667.
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    18. Sandholm, William H., 2001. "Potential Games with Continuous Player Sets," Journal of Economic Theory, Elsevier, vol. 97(1), pages 81-108, March.
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    More about this item

    Keywords

    economic geography; mutiple equilibria; forward-looking expectation; global stability; potential;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium

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