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The Annals of Regional Science

, Volume 51, Issue 2, pp 593–620 | Cite as

Industrial configuration in an economy with low transportation costs

  • Hajime TakatsukaEmail author
  • Dao-Zhi Zeng
Original Paper
  • 438 Downloads

Abstract

We examine how the spatial economy with multiple industries is shaped when interregional trade costs and intraregional commuting costs are low. All industries are characterized by increasing returns to scale and monopolistic competition, and they are differentiated by their trade costs and the degree of intra-industry competition measured by their firm numbers. We find some distinct rules in industrial location. First, at most, one industry disperses, while others agglomerate in a region according to their ratios of relative trade costs to firm numbers. Second, industries with stronger competition constitute a smaller region, while those with higher trade costs compose a larger region. The results are consistent with the classical Weberian location theory and suggest that the degree of intra-industry competition also becomes an essential factor to determine industrial location when transportation costs are small. Finally, the population differential between the regions monotonically decreases in the relative commuting cost.

JEL Classification

F12 R12 R30 

Notes

Acknowledgments

We are grateful to Tomoya Mori, Takatoshi Tabuchi, three anonymous reviewers, Editor Janet Kohlhase, and the seminar participants at University of Tokyo, Tohoku University, and Chuo University for helpful suggestions. Financial support from Japan Society for the Promotion of Science through Grants-in-Aid for Scientific Research 24530303, 22330073, 20730183 for the first author, and 24243036, 24330072, 22330073, 21243021, and the Y.C. Tang disciplinary development fund of Zhejiang University for the second author are acknowledged.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Graduate School of ManagementKagawa UniversityKagawaJapan
  2. 2.Graduate School of Information SciencesTohoku UniversityMiyagiJapan
  3. 3.Center for Research of Private EconomyZhejiang UniversityZhejiangChina

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