A theory of rational spatial agglomerations

Pascal Mossay

Regional Science and Urban Economics, 2013, vol. 43, issue 2, 385-394

Abstract: We model the behavior of rational forward-looking agents in a spatial economy. The economic geography structure is built on Fujita et al. (1999)'s racetrack economy. Workers choose optimally what to consume at each period, as well as which spatial itinerary to follow in the geographical space. The spatial extent of the resulting agglomerations increases with the taste for variety and the expenditure share on manufactured goods, and decreases with transport costs. Because forward-looking agents anticipate the future formation of agglomerations, they are more responsive to spatial utility differentials than myopic agents. As a consequence, the emerging agglomerations are larger under perfect foresight spatial adjustments than under myopic ones.

Keywords: New economic geography; Agglomeration; Scale economies; Monopolistic competition; Spatial economy; Migration; Expectation (search for similar items in EconPapers)
JEL-codes: D84 D91 F12 J61 R12 R13 R23 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:43:y:2013:i:2:p:385-394

DOI: 10.1016/j.regsciurbeco.2012.09.005

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