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AGGLOMERATION EFFECTS AND THE COMPETITION FOR FIRMS

Robin Boadway (), Katherine Cuff () and Nicolas Marceau

Department of Economics Working Papers from McMaster University

Abstract: 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 be 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.

JEL-codes: H20 H70 J60 R30 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2002-08
New Economics Papers: this item is included in nep-com, nep-geo, nep-pub and nep-ure
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Related works:
Journal Article: Agglomeration Effects and the Competition for Firms (2004) Downloads
Working Paper: Agglomeration Effects and the Competition for Firms (2003) Downloads
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