Transport Costs, Intermediate Goods and Localized Growth

Uwe Walz

No 1267, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents a dynamic, two-region general equilibrium model in which inter-regional production and trade patterns are endogenously determined. Localized growth stems from geographical concentration of an industrial sector exhibiting permanent productivity increases. Geographical concentration is due to the interaction of the size of local markets and local competition in the differentiated input industry. Regional factor endowment with an immobile factor is decisive for long-run specialization, trade and growth patterns between regions if large endowment differences prevail. With equally-sized regions, multiple equilibria exist. Furthermore, the paper finds that integration might lead to increasing regional concentration of production and growth.

Keywords: Economic Geography; Factor Mobility; Regional Growth (search for similar items in EconPapers)
JEL-codes: O18 R11 R12 (search for similar items in EconPapers)
Date: 1995-11
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Citations: View citations in EconPapers (2)

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