Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'

Gianmarco Ottaviano and Diego Puga

No 1699, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. Agglomeration raises the price of immobile local factors and goods, however, so for low transport costs, firms may spread to regions where those prices are lower.

Keywords: Agglomeration; Economic Geography; Integration; Linkages; Location; Migration (search for similar items in EconPapers)
JEL-codes: F12 F15 R12 (search for similar items in EconPapers)
Date: 1997-10
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Citations: View citations in EconPapers (46)

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Journal Article: Agglomeration in the Global Economy: A Survey of the ‘New Economic Geography’ (1998)
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