Economic Geography: a Review of the Theoretical and Empirical Literature

Stephen Redding

No 7126, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper reviews the new economic geography literature, which accounts for the uneven distribution of economic activity across space in terms of a combination of love of variety preferences, increasing returns to scale and transport costs. After outlining the canonical core and periphery model, the paper examines the empirical evidence on three of its central predictions: the role of market access in determining factor prices, the related home market effect in which demand has a more than proportionate effect on production, and the potential existence of multiple equilibria. In reviewing the evidence, we highlight issues of measurement and identification, alternative potential explanations, and remaining areas for further research.

Keywords: Home market effect; Market access; Multiple equilibria; New economic geography (search for similar items in EconPapers)
JEL-codes: F12 F14 O10 (search for similar items in EconPapers)
Date: 2009-01
New Economics Papers: this item is included in nep-dev, nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Chapter: Economic Geography: A Review of the Theoretical and Empirical Literature (2013)
Working Paper: Economic Geography: A Review of the Theoretical and Empirical Literature (2009)
Working Paper: Economic geography: a review of the theoretical and empirical literature (2009)
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