Agglomeration, Trade and Selection

Gianmarco Ottaviano

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: This paper studies how firm heterogeneity in terms of productivity affects the balance between agglomeration and dispersion forces in the presence of pecuniary externalities through a selection model of monopolistic competition with variable mark-ups. It shows that firm heterogeneity matters. However, whether it shifts the balance from agglomeration to dispersion or the other way round depends on its specific features along the two defining dimensions of diversity: 'richness' and 'evenness'. Accordingly, the role of firm heterogeneity in selection models of agglomeration cannot be fully understood without paying due attention to various moments of the underlying firm productivity distribution.

Keywords: agglomeration; trade; heterogeneity; selection; economic geography (search for similar items in EconPapers)
JEL-codes: F12 R11 R12 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-eff, nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Related works:
Journal Article: Agglomeration, trade and selection (2012)
Working Paper: Agglomeration,Trade and Selection (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1129

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