Spatial Equilibria: The Case of Two Regions

Konstantin Kucheryavyy, Gary Lyn and Andres Rodriguez-Clare

No 29592, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper we characterize the set of equilibria in a generalized version of the canonical two-region economic geography model that nests the class of models in Allen and Arkolakis (2014) as well as Krugman (1991) and features an input-output loop. We provide sufficient conditions for uniqueness of equilibria that — in contrast to the well-know result in Allen and Arkolakis (2014) — allow for positive agglomeration externalities, which concentrate economic activity, even in the absence of congestion effects, which disperse it, and highlight the key role played by three additional parameters: the trade elasticity, which regulates the strength of the dispersion force associated with the decline in the terms of trade caused by migration into a region; trade costs, which weaken this dispersion force by limiting trade across regions; and the importance of the agricultural sector, which pushes against agglomeration forces in manufacturing.

JEL-codes: F10 F20 R0 R13 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-geo, nep-int and nep-ure
Note: ITI
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.nber.org/papers/w29592.pdf (application/pdf)

Related works:
Journal Article: Spatial Equilibria: The Case of Two Regions (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:29592

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w29592

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().