Urban agglomeration and heterogeneous firms: a synthesis of Helpman and Melitz

Yiming Zhou

Journal of Economics, 2020, vol. 130, issue 3, No 3, 275-296

Abstract: Abstract This study revisits the seminal findings by Helpman in 1998 in a more comprehensive setup with Melitz-type firm heterogeneity. Our model features how a change in firm heterogeneity affects agglomeration in an urban-space economy. We contribute to the literature by analytically giving explicit solutions for the threshold values of the housing preference and transport costs that are crucial in determining the equilibrium. We also obtain new findings in the case of asymmetric housing stocks. Our results provide alternative explanations to stylized facts such as “ghost cities” in countries undertaking high-speed urbanization and real estate development.

Keywords: Urban agglomeration; Housing congestion; Firm heterogeneity (search for similar items in EconPapers)
JEL-codes: F12 F22 R12 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:130:y:2020:i:3:d:10.1007_s00712-020-00698-5

DOI: 10.1007/s00712-020-00698-5

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