Governmental activity, integration, and agglomeration

Ingrid Ott () and Susanne Soretz
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Ingrid Ott: Institute of Economics, Leuphana University of Lüneburg

No 57, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

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 intergation, agglomeration is less likely to arise and concentration will be lower. Relative congestion reinforces agglomerartion, thereby increasing equilibrium concentraion. Due to the congestion externalities, the market outcome ends up in subotimally high concentration.

Keywords: public inputs; agglomeration; integration (search for similar items in EconPapers)
JEL-codes: O4 R5 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2006-07
New Economics Papers: this item is included in nep-geo and nep-ure
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Related works:
Working Paper: Governmental activity, integration, and agglomeration (2008)
Working Paper: Governmental activity, integration, and agglomeration (2007)
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