Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions

Sylvain Barde

Studies in Economics from School of Economics, University of Kent

Abstract: This paper extends the Puga (1999) model by introducing urban frictions. It assumes that the agglomeration of manufacturing in a city imposes a cost on the inhabitants of the agglomerated region. Furthermore, an implicit function methodology is developed to provide a numerical stability function that does not require prior analytical work. Simulations reveal that these numerical stability conditions are consistent with the original Puga (1999) analytical predictions. The central finding is that the extension significantly alters the agglomeration properties of the original Puga framework. In particular, partial agglomeration becomes a stable long run outcome in both with and without migration. Furthermore, the level of sensitivity of the agglomeration to the friction cost market parameters is shown to be different in the both cases. This outlines the need to evaluate the imperfectness of migration when modifying the urban geography as a policy implication.

Keywords: Agglomeration; new economic geography; migration; urban friction (search for similar items in EconPapers)
JEL-codes: F12 R11 R12 (search for similar items in EconPapers)
Date: 2007-01
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions (2007)
Working Paper: Stable Partial Agglomeration in a New Economic Geography Model with Urban Frictions (2007)
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