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Governmental activity, integration, and agglomeration

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  • Ott, Ingrid
  • Soretz, Susanne

Abstract

This paper analyzes, within a regional growth model, the impact of productive governmental policy and integration on the spatial distribution of economic activity. Integration is understood as enhancing territorial cooperation between the regions, and it describes the extent to which one region may benefit from the other region's public input, e.g. the extent to which regional road networks are connected. Both integration and the characteristics of the public input crucially affect whether agglomeration arises and if so to which extent economic activity is concentrated: As a consequence of enhanced integration, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomeration, thereby increasing equilibrium concentration. Due to the congestion externalities, the market outcome ends up in suboptimally high concentration.

Suggested Citation

  • Ott, Ingrid & Soretz, Susanne, 2008. "Governmental activity, integration, and agglomeration," Kiel Working Papers 1465, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1465
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    References listed on IDEAS

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    Cited by:

    1. Benos, Nikos, 2009. "Fiscal policy and economic growth: empirical evidence from EU countries," MPRA Paper 19174, University Library of Munich, Germany.
    2. Harald Zschiedrich, 2008. "EU-Regionalpolitik im Spagat zwischen Wachstums- und Ausgleichszielen," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 34(4), pages 509-533.
    3. Gupta, Manash Ranjan & Barman, Trishita Ray, 2010. "Health, infrastructure, environment and endogenous growth," Journal of Macroeconomics, Elsevier, vol. 32(2), pages 657-673, June.
    4. Boll, Christina, 2010. "Mind the gap!: The amount of German mothers' care bill and its game theoretical issues," HWWI Research Papers 1-29, Hamburg Institute of International Economics (HWWI).
    5. Andreas Irmen & Johanna Kuehnel, 2009. "Productive Government Expenditure And Economic Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 23(4), pages 692-733, September.
    6. Gupta, Manash Ranjan & Barman, Trishita Ray, 2009. "Fiscal policies, environmental pollution and economic growth," Economic Modelling, Elsevier, vol. 26(5), pages 1018-1028, September.
    7. Trishita Ray Barman & Manash Ranjan Gupta, 2010. "Public Expenditure, Environment, and Economic Growth," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 12(6), pages 1109-1134, December.

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    More about this item

    Keywords

    Public inputs; agglomeration; integration;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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