Agglomeration Effects and the Competition for Firms
Robin Boadway (),
Katherine Cuff () and
Nicolas Marceau ()
Cahiers de recherche from CIRPEE
A two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may abe part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.
Keywords: Agglomeration; Inter-Jurisdictional Competititon; Unemployment (search for similar items in EconPapers)
JEL-codes: H2 H7 J6 R3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo, nep-pbe and nep-ure
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Journal Article: Agglomeration Effects and the Competition for Firms (2004)
Working Paper: AGGLOMERATION EFFECTS AND THE COMPETITION FOR FIRMS (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0324
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