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Over-simplification and tractability in quasi-linear neg models

Sylvain Barde () and John Pierson
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John Pierson: University of Kent

No 2009-14, Sciences Po publications from Sciences Po

Abstract: An inconsistency is found in the demand side of the NEG models developed in Pflüger (2004) that follows from the absence of a non-negativity constraint on the consumption of agricultural goods. This seriously weakens the results of the original paper and those of ensuing contributions in Pflüger and Südekum (2008a,b). A solution to this problem is developed which imposes severe restrictions on the relative size of two of the core model parameters, the implications of which are examined.

Keywords: Agglomeration; new economic geography; quasi-linear utility (search for similar items in EconPapers)
JEL-codes: D11 R12 F12 (search for similar items in EconPapers)
Date: 2009-06
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