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A model of economic geography with demand-pull and congestion costs

Olga Alonso-Villar

Papers in Regional Science, 2008, vol. 87, issue 2, 261-276

Abstract: This article proposes a simple model of economic geography by which to derive analytical results when jointly considering two centrifugal forces - congestion costs together with the pull demand effect - within the Dixit-Stiglitz-Iceberg framework. In this vein, we develop a unified model with labour mobility that combines some of the features of Tabuchi (1998) with those of Forslid and Ottaviano (2003). We analytically show that when considering the effects of congestion costs, the dispersion of economic activity is possible not only at high, but also at low transport costs. This result corroborates previous numerical simulations conducted by Tabuchi (1998). Copyright (c) 2008 the author(s). Journal compilation (c) 2008 RSAI.

Date: 2008
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Working Paper: A model of economic geography with demand pull and congestion costs (2006) Downloads
Working Paper: A Model of Economic Geography with Demand Pull and Congestion Costs Downloads
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