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Agglomeration and growth: The effects of commuting costs

Antonio Accetturo ()

Papers in Regional Science, 2010, vol. 89, issue 1, 173-190

Abstract: Abstract We present a model of industrial location and endogenous growth with congestion costs. According to the interplay between knowledge spillovers and commuting costs, we are able to obtain both a Krugman‐type and a bell‐shaped agglomeration outcome. In the first case, the economy experiences a permanent income inequality in the steady state and income divergence in the transitional dynamics. In the second case, we observe an enlargement of the industrial core of the economy with a strong catching up by the periphery. Welfare analysis shows that congestion creates (in the bell‐shaped agglomeration case) a negative welfare effect on peripheral unskilled workers and it renders the agglomerated equilibrium Pareto inferior to dispersion. Resumen Presentamos un modelo de localización industrial y crecimiento endógeno con costos de congestión. Merced a la interacción entre spillovers de conocimiento y costos de desplazamiento al trabajo, somos capaces de obtener tanto un resultado de aglomeración de tipo Krugman como uno en forma de campana. En el primer caso, la economía experimenta una desigualdad de ingresos permanente en el estado estable y divergencia de ingresos durante la dinámica de transición. En el segundo caso, observamos un crecimiento del núcleo industrial de la economía con un fuerte efecto de recuperación por la periferia. Un análisis de bienestar muestra que la congestión crea (en el caso de la aglomeración en forma de campana) un efecto de bienestar negativo en mano de obra no cualificada de la periferia y que deja el equilibrio de Pareto aglomerado inferior a la dispersión.

Date: 2010
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https://doi.org/10.1111/j.1435-5957.2009.00254.x

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