Economic Integration and Agglomeration in a Middle Product Economy

Jacques Thisse, Ping Wang and Shin-Kun Peng ()

No 4441, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The Paper examines the interactions between economic integration and population agglomeration in a middle product economy displaying neoclassical growth. There are two vertically-integrated economies. Each consists of a large number of final good competitive firms operating plants in both regions, and a large number of intermediate goods monopolistically competitive firms operating each in only one region. While immobile workers are employed with intermediate goods to produce the final good, mobile workers are used to design the line of differentiated intermediate good inputs. Capital is immobile and the final good is non-traded, whereas the intermediate goods are traded. We find that employment agglomeration and output growth need not be positively related. Furthermore, trade is not necessarily beneficial to regional growth, whereas trade between the two regions need not be associated with a widened skilled-unskilled wage gap.

Keywords: Economic integration; Agglomeration; Intermediate goods trade; Growth (search for similar items in EconPapers)
JEL-codes: D90 F15 O41 R13 (search for similar items in EconPapers)
Date: 2004-08
New Economics Papers: this item is included in nep-dev, nep-geo and nep-mic
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Related works:
Journal Article: Economic integration and agglomeration in a middle product economy (2006)
Working Paper: Economic integration and agglomeration in a middle product economy (2006)
Working Paper: Economic Integration and Agglomeration in a Middle Product Economy (2005)
Working Paper: Economic integration and agglomeration in a middle product economy (2004)
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