"The 'genome' of NEG models with vertical linkages": a comment on the welfare analysis

Carl Gaigne

Journal of Economic Geography, 2006, vol. 6, issue 2, 141-149

Abstract: Ottaviano and Robert-Nicoud (2006) propose a general model that encompasses the model developed by Krugman and Venables (1995)--henceforth, 'CPVL model'--and the model by Ottaviano (2002)--henceforth, FEVL model. The authors demonstrate that FEVL and CPVL models exhibit the same properties when agglomeration leads one region to have production in both the manufacturing and the traditional sector and the other region to specialization in the tradition sector. This note shows that both models do not share their normative properties when agglomeration leads both regions to fully specialize, one in the manufacturing sector and the other in the traditional sector. Copyright 2006, Oxford University Press.

Date: 2006
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