Governmental activity, integration, and agglomeration

Ingrid Ott and Susanne Soretz

No 1465, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

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.

Keywords: Public inputs; agglomeration; integration (search for similar items in EconPapers)
JEL-codes: O33 Z13 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Working Paper: Governmental activity, integration, and agglomeration (2007)
Working Paper: Governmental activity, integration, and agglomeration (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1465

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