Abstract
This paper investigates the effect of capital on agglomeration behavior within a framework of the core-periphery model. Capital is interregionally mobile in the short-run, whereas labor is mobile in the long-run. In conclusion, (i) capital and industries are distributed among regions more equally than workers when transport costs are sufficiently high, and the relation is reversed when transport costs are sufficiently low; (ii) a rise in capital intensity stimulates agglomeration in the economy.
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Received: July 2003/Accepted: February 2004
I am indebted to Professors M. Fujita and K. Yamamoto for valuable comments on an earlier draft. I also wish to thank Professors T. Mori, T. Kinugasa, T. Kuroda, M. Makabenta and two anonymous referees for helpful suggestions.