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Increasing Returns and Economic Geography
Open accessAbstract
This paper develops a two-region, two-sector general equilibriun model of location.The location of agricultural production is fixed, but ionopolistcally competitive manufacturing finns choose their location to maximize profits.If transportation costs are high, returns to scale weak, and the share of spending on manufactured goods low, the incentive to produce close to the market leads to an equal division of manufacturing between the regions.With lower transport costs, stronger scale economies, or a higher manufacturing share, circular causation sets in: the more manufacturing is located in one region, the larger that region's share of demand, and this provides an incentive to locate still more manufacturing there.Thus when the parameters of the economy lie even slightly on one side of a critical "phase boundary", all manufacturing production ends up concentrated in only one region.
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Cites
On the mechanics of economic development
Lucas, R. E. (1988) · Journal of Monetary Economics · doi:10.1016/0304-3932(88)90168-7 · Cited by 24,085
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I NDUSTRIAL S YMBIOSIS : Literature and Taxonomy
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Estimates of the Trade and Welfare Effects of NAFTA
Caliendo, L., & Parro, F. (2015) · The Review of Economic Studies · doi:10.1093/restud/rdu035 · Cited by 1,518
Neffke, F., Henning, M., & Boschma, R. (2011) · Economic Geography · doi:10.1111/j.1944-8287.2011.01121.x · Cited by 1,463
National systems of entrepreneurship: measurement issues and policy implications
Ács, Z. J., Autio, E., & Szerb, L. (2014) · Research Policy · doi:10.1016/j.respol.2013.08.016 · Cited by 1,301
Metadata
- Authors
- Krugman, P.
- Venue
- Journal of Political Economy
- Publisher
- University of Chicago Press
- Published
- 1991-06
- Volume
- 99
- Issue
- 3
- Pages
- 483-499
- ISSN
- 0022-3808 (ISSN-L)
- 1537-534X
- OpenAlex
- W1979132028
- Cited by
- 12,231
- References
- 1
- FWCI
- 42.94
- Type
- journal article
- Language
- en
- Open access
- green
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