The Public Sector and Core-Periphery Models

Luis Lanaspa (), Fernando Pueyo and Fernando Sanz
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Fernando Sanz: Faculty of Economics and Business Studies, University of Zaragoza, Gran Via 2, 50005 Zaragoza, Spain, fsanz@posta.unizar.es

Urban Studies, 2001, vol. 38, issue 10, 1639-1649

Abstract: In this paper, we present an extension to Krugman's core-periphery model-namely, the introduction of the public sector as a new economic agent. There are two main results: first, we demonstrate theoretically that regions with a lower tax-burden in net terms, in the sense of having lower taxes and/or higher levels of public efficiency in their management, offer greater incentives to attract economic activity; secondly, the influence of the transport costs on the equilibria is not monotonous, as under the original approach, but now depends on its size, reflecting a strong interdependence between all the parameters of the model.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:38:y:2001:i:10:p:1639-1649

DOI: 10.1080/00420980120084796

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