How do All Roads Lead to Rome? The Story of Transportation Network Inducing Agglomeration

Ahmed Saber Mahmud ()
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Ahmed Saber Mahmud: Johns Hopkins University

Networks and Spatial Economics, 2021, vol. 21, issue 2, No 7, 419-464

Abstract: Abstract The paper describes the formation of a rural-urban network in which urban areas decide to form links with other urban as well as rural regions. Furthermore, we illustrate how the presence of network can induce agglomeration . Urban areas are mainly production centers of manufacturing goods, and the rural regions that of agriculture. Both regions need to form a network to trade with one another. Network formation occurs in the presence of transportation and network formation costs. The equilibrium rural-urban network is formed when regions attempt to minimize transportation cost as well as the total cost of forming links in a network. The paper illustrates how network structure itself can create agglomeration apart from the processes described in the literature. Manufacturing firms locate to a single area to create a hub that has direct links to rural regions and rural-urban trade proceeds with minimum transportation costs and a minimum number of links.

Keywords: Agglomeration; Network formation (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s11067-021-09529-6

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