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The effect of capital flow on the agglomeration evolution of footloose entrepreneurs

Ching-mu Chen ()
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Ching-mu Chen: Zhongnan University of Economics and Law

Asia-Pacific Journal of Regional Science, 2019, vol. 3, issue 3, 761-791

Abstract: Abstract To answer whether capital mobility exacerbates or dampens the agglomerative tendency of footloose entrepreneurs, this paper incorporates a footloose capital with a footloose-entrepreneur manufacturing industry based on a tractable analytical structure with two identical regions. The model shows that these two sectors interact with each other, and features five types of equilibrium configurations. Most interestingly, this paper finds that the mobility of physical capital plays a stabilizing role in the catastrophic agglomeration caused by footloose entrepreneurs.

Keywords: Footloose capital; Footloose entrepreneur; Pitchfork bifurcation; Agglomeration evolution; New economic geography (search for similar items in EconPapers)
JEL-codes: F12 F15 F21 F22 R12 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s41685-019-00109-8

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