Economic geography and the role of profits

Pierre Picard, Jacques Thisse and Eric Toulemonde

No 2002027, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In modern economies, the amount of profits distributed to shareholders is far from being negligible. We show that the way they are distributed among agents matters for the space-economy. For example, the existence of mobile rentiers is sufficient to make the symmetric configuration unstable for all transport cost values and to make partial agglomeration of firms stable. Obviously, to account for profits and for their distribution, the assumption of free entry must be abandoned. So doing, we ignore fixed costs and show that it is imperfect competition more than increasing returns that matters for the formation of agglomeration in economic geography..

Keywords: economic geography; imperfect competition; product differentiation (search for similar items in EconPapers)
JEL-codes: L13 R13 (search for similar items in EconPapers)
Date: 2002-04
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Citations: View citations in EconPapers (8)

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Working Paper: Economic Geography and the Role of Profits (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2002027

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