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The Spatial Economy: Cities, Regions, and International Trade
Abstract
The authors show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. Since 1990 there has been a renaissance of theoretical and empirical work on the spatial aspects of the economy—that is, where economic activity occurs and why. Using new tools—in particular, modeling techniques developed to analyze industrial organization, international trade, and economic growth—this "new economic geography" has emerged as one of the most exciting areas of contemporary economics. The authors show how seemingly disparate models reflect a few basic themes, and in so doing they develop a common "grammar" for discussing a variety of issues. They show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. This book is the first to provide a sound and unified explanation of the existence of large economic agglomerations at various spatial scales.
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“Geographic distance (or transportation costs) plays also a central role in the literature on trade and economic geography(Fujita et al. 1999).”
From Economic reforms and industrial policy in a panel of Chinese cities (2016) · cites this paper as Fujita et al. 1999
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Fujita, M., & Hamaguchi, N. (2011) · The Annals of Regional Science · doi:10.1007/s00168-011-0484-y · Cited by 42
“Broadly speaking, the idea proposed by Fujita, Krugman, and Venables (1999) is shared by many researchers: that is, agglomeration results from the interaction among increasing returns at the individual firm-level, transport costs (broadly defined), and factor mobility.”
Self-citationCompeting-destinations gravity model: an application to the geographic distribution of FDI
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“From the perspective of the new economic geography, the market mechanism of increasing returns of scale and positive feedback of agglomeration inevitably results in the unbalanced development of spatial economy (Fujita et al., 1999).”
BackgroundCadot, O., de Mélo, J., Plane, P., Wagner, L., & Woldemichael, M. T. (2017) · Revue d économie du développement · doi:10.3917/edd.302.0019 · Cited by 42
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“Unification is regarded as a major virtue of geographical economics, a virtue that it shares with theories in more mature fields: “there is a need to unify fields in economics just like in physics, and the book [Fujita et al. 1999] has contributed to this discourse” (Urban, 2001: 151).”
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“The rise of the “New Urban World” finds its genesis in a broad and diversified ramification of agglomeration externalities, which have extensively been discussed and analysed in the recent urban economics literature (see, for example, Henderson et al. 1995; Fujita et al. 1999; Glaeser 2011; Nijkamp 2008; Camagni et al…”
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Ducruet, C. (2016) · HAL (Le Centre pour la Communication Scientifique Directe) · doi:10.4324/9781315601564-10 · Cited by 41
“The optimistic approach defines ports as growth poles and enablers of economies of scale for production and trade and, therefore, they provide comparative advantages to regions and cities where they are located (Fujita et al., 1999; Clark et al., 2004).”
Liu, Y., Fan, P., Yue, W., et al. (2019) · Sustainability · doi:10.3390/su11102790 · Cited by 41
“Many researches view polycentricity as a result of multiple equilibria caused by centripetal and centrifugal forces [20,21].”
BackgroundGEOGRAPHY, VON THÜNEN, AND TOBLER’S FIRST LAW: TRACING THE EVOLUTION OF A CONCEPT
Walker, R. T. (2021) · Geographical Review · doi:10.1080/00167428.2021.1906670 · Cited by 41
“This variant of von Thünen underlies the field of regional and urban economics, and transportation costs comprise one of main building blocks of the so-called new economic geography (Krugman 1998; Fujita et al. 1999, 2011).”
BackgroundThe long-term Implications of Local Industrial Clusters
Brenner, T., & Gildner, A. (2006) · European Planning Studies · doi:10.1080/09654310600933371 · Cited by 41
“The theoretical literature mainly studies the factors and interrelationships that cause regional imbalances in the geographic distribution (Krugman, 1991; Fujita et al., 1999; Fujita & Thisse, 2002).”
BackgroundGeographical Economics versus Economic Geography: Towards a Clarification of the Dispute
Marchionni, C. (2004) · Environment and Planning A Economy and Space · doi:10.1068/a36305 · Cited by 41
“Modelling tricks are understood as ``assumptions that reflect not so much a realistic view of how the world works as a judgement about what will make the analysis of geographic issues manageable without doing too much damage to the relevance of that analysis'' (Fujita et al, 1999, page 6).”
BackgroundInfluentialAvdeitchikova, S. (2009) · Entrepreneurship and Regional Development · doi:10.1080/08985620802025962 · Cited by 41
Transport development and the evolution of economic geography
Fujita, M., & Mori, T. (2005) · Portuguese Economic Journal · doi:10.1007/s10258-005-0042-6 · Cited by 41
“, Fujita, Krugman and Venables [12]), we analyze impacts of transport costs on the spatial patterns of economic agglomeration.”
Self-citationTrade policy: Home market effect versus terms-of-trade externality
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“increasing returns to scale (Fujita et al., 1999).”
BackgroundOn the structure of explanatory unification: the case of geographical economics
Mäki, U., & Marchionni, C. (2009) · Studies in History and Philosophy of Science Part A · doi:10.1016/j.shpsa.2009.03.015 · Cited by 39
“Empirical investigation, which is relatively underdeveloped (cf. Fujita et al. 1999 and Brakman et al. 2001) should help to establish whether the phenomena GeoEcon seeks to unify are in fact united in the way depicted.”
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“Expansion of the European Union (EU) into becoming 25 members as well as the dynamic effects of North American Free Trade Association on the economics of industrial location has been a topic widely discussed particularly in the geographical economics literature (Krugman, 1991; Fujita et al., 1999).”
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“…Failing States and Cumulative Causation 23 transferred mainly through face-to-face relationships – not transferred easily between people in different places in the form of machinery or blueprints (Fujita et al., 1999; Gomory and Baumol, 1992; Porter, 1988; Sutton, 2000; Venables, 2003).”
BackgroundThe emergence of Zipf's Law in a system of cities: An agent-based simulation approach
Mansury, Y. S., & Gulyás, L. (2006) · Journal of Economic Dynamics and Control · doi:10.1016/j.jedc.2006.08.002 · Cited by 38
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“This hypothesis falls in lines with the paradigm that spatial externalities play a role on economic performance (Fujita et al., 1999).”
ResultObservational Equivalence? Regional Studies and Regional Science
McCann, P. (2007) · Regional Studies · doi:10.1080/00343400701624494 · Cited by 40
“New models and techniques develop over time, as for example is the case with the development of new economic geography models (FUJITA et al., 1999) or the micro-dynamics work of GLAESER (1999).”
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Sutton, J. D. (2001) · London School of Economics and Political Science Research Online (London School of Economics and Political Science) · Cited by 40
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Crafts, N. F. R., & Venables, A. J. (2001) · Warwick Research Archive Portal (University of Warwick) · doi:10.82444/warw.33482935 · Cited by 42
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“Moreover, trade liberalization and regional economic integration often increases inequality and uneven development among the regions, rather than reducing it (see e.g. Fujita, Krugman, and Venables 1999, Chapter 17).”
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Rozanova-Smith, M. (2021) · Sustainability · doi:10.3390/su132112058 · Cited by 39
“…academic and public discussions conceptualize the future of the North and its urban areas generally through the prisms of applied economic theory [22] with elements of instrumental rationality, economic geography [23], or allusions to a Soviet historical legacy of Arctic exploration and…”
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Pumain, D., & Sanders, L. (2013) · Environment and Planning A Economy and Space · doi:10.1068/a45620 · Cited by 36
“In the theories derived from microeconomics, especially the new urban economy and the new economic geography (Fujita et al, 1999), the focus is on the behaviours of economic agents.”
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Krugell, W., & Matthee, M. (2009) · Development Southern Africa · doi:10.1080/03768350903086838 · Cited by 39
AGGLOMERATION, TRADE, AND SPATIAL DEVELOPMENT: BRINGING DYNAMICS BACK IN
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“It does so by incorporating three important, realistic features of the contemporary economy, labor mobility, product-variety, and firm-level economies of scale (Krugman, 1991, and Fujita, Krugman, and Venables, 1999).”
Regional Policy and the Productive Efficiency of Japanese Industries
Otsuka, A., & Goto, M. (2013) · Regional Studies · doi:10.1080/00343404.2013.795285 · Cited by 39
“For instance, FUJITA et al. (1999) and FUJITA and THISSE (2002) pointed out that the development of highway traffic network reduces transport costs, which improves market access, thus improving agglomeration economies.”
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Bajardi, P., Delfino, M., Panisson, A., Petri, G., & Tizzoni, M. (2015) · EPJ Data Science · doi:10.1140/epjds/s13688-015-0041-5 · Cited by 40
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“Urban economic theory is important in understanding the way competition orders space, and the work of Fujita et al. (1999) must be noted at regional and international scales.”
BackgroundAnalyzing Agricultural Agglomeration in China
Li, E., Coates, K. S., Li, X., et al. (2017) · Sustainability · doi:10.3390/su9020313 · Cited by 39
“These theories established their models based on constant returns to scale in agriculture and zero transportation costs [7,21], which is not consistent with the modern, increasingly concentrated, spatial distribution of agriculture.”
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Barberia, L., & Biderman, C. (2010) · Geoforum · doi:10.1016/j.geoforum.2010.07.002 · Cited by 38
“Fujita et al (1999) develop models for new center formation and destruction that could be considered to compatible with the expansion period described by Stopler and Walker in the geography literature.”
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Guo, D., Jiang, K., Xu, C., & Yang, X. (2017) · Journal of Economic Geography · doi:10.1093/jeg/lbz038 · Cited by 39
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Regional unemployment and human capital in transition economies1
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Cities as complex systems—Collection overview
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Chapter 30 Culture in Urban and Regional Development
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“Agglomeration is a fundamental and ubiquitous constituent of successful development (e.g. Bairoch, 1988; Krugman, 1991; Fujita et al., 1999; Scott, 2002).”
BackgroundLampón, J. F., Peñas, S. L., & Benito, J. G. (2014) · International Journal of Production Research · doi:10.1080/00207543.2014.942757 · Cited by 38
“According to the neoclassical approach, based on explanatory models of optimisation of localisation cost, labour cost is one of the main forces driving firm relocation (Fujita, Krugman, and Venables 1999).”
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“At the core of this model is the concept of increasing returns, which has become popular in recent years within both urban economics (Rivera-Batiz, 1988, Abdel-Rahman and Fujita 1990, Quigley, 1998) and in geographical economics ( Fujita, Krugman and Venables, 1999 ).”
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“SH = n n H £ ξH(1 + α (σ − 1)) + αβσwα−1 SH ¤ , (14)”
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“In particular, the New Economic Geography (NEG) literature (Krugman 1991; Fujita et al. 1999) tries to explain spatial clusters of economic activity by the interplay between companies’ trade cost and scale economies.”
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“To obtain the break point analytically we generalize the procedure set out in Fujita et al. (1999), which requires defining an initial distribution for the stability analysis.”
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“Break point triggering spatial agglomeration For the two-place economy, the break point of the transport cost τ, at which symmetric places change catastrophically into a core–periphery pattern, is highlighted as a key concept (Fujita, Krugman, and Venables, 1999 [15]).”
BackgroundMethodInfluentialLengyel, I., Vas, Z., Kanó, I. S., et al. (2017) · European Planning Studies · doi:10.1080/09654313.2017.1319467 · Cited by 37
“…that spatial concentration is mainly influenced by lower unit transport costs, increasing economies of scale characterizing global, traded industries and monopolistic competition (Brakman, Garretsen, & van Marrewijk, 2009; Combes, Mayer, & Thisse, 2008; Fujita et al., 1999; Fujita & Thisse, 2002).”
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“Spatial concentration gives the rise to pecuniary externalities (Henderson 1997; Fujita, Krugman, and Venables 1999).”
BackgroundWhen and why regional clusters become basic building blocks of modern economy
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Zhang, W. D., Cheng, J., Liu, X., et al. (2022) · Environment Development and Sustainability · doi:10.1007/s10668-022-02277-8 · Cited by 37
“(Fujita et al., 1999).”
The contingent nature of broadband as an engine for business startups in rural areas
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Modelling transport in interaction with the economy
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“…competition, increasing returns, transportation costs and, therefore, size of the local final demand market, strength of local vertical linkages, and differential local labour costs (for details, see KRUGMAN, 1991; KRUGMAN and VENABLES, 1995; FUJITA et al., 1999; and FUJITA and THISSE, 2002).”
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The job creation potential of the service sector in Europe
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Metadata
- Authors
- Fujita, M., Krugman, P., & Venables, A. J.
- Venue
- The MIT Press eBooks
- Publisher
- The MIT Press
- Published
- 1999-06-11
- OpenAlex
- W2889260602
- Cited by
- 4,788
- References
- 0
- Citations by year
- 2026: 149 · 2025: 132 · 2024: 112 · 2023: 121 · 2022: 126 · 2021: 156 · 2020: 142 · 2019: 163 · 2018: 179 · 2017: 165 · 2016: 115 · 2015: 171 · 2014: 186 · 2013: 211 · 2012: 245
- FWCI
- 173.24
- Type
- book
- Language
- en
- Open access
- closed
- Locations
- The MIT Press eBooks (publishedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Agglomeration and Urban Systems
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Regional Economic Trends and Sectoral Structure
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Keywords
- new economic geography, increasing returns, transportation costs, factor mobility, agglomeration economies, urban economics, regional economics, international trade, industrial organization, economic growth, spatial economics
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
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