A third sector in the core-periphery model: non-tradable goods
- 305 Downloads
We extend an analytically solvable core-periphery model by introducing a monopolistically competitive sector of non-tradable goods that is mobile across regions. We find that when the elasticity of substitution among non-tradable goods is very low, there is agglomeration of all the production (of both tradable and non-tradable goods). When the elasticity of substitution among non-tradable goods is sufficiently high (“no black-hole” condition), then there is symmetric dispersion of all the production, if trade costs are high; or full agglomeration of the production of tradable goods with partial agglomeration of the production of non-tradable goods, if trade costs are low.
JEL ClassificationF12 R12
Unable to display preview. Download preview PDF.
- Baldwin R, Forslid R, Martin P, Ottaviano G, Robert-Nicoud F (2003) Economic geography and public policy. Princeton University Press, PrincetonGoogle Scholar
- Cerina F, Mureddu F (2009) Is agglomeration really good for growth? Global efficiency and interregional equity. Working Paper CRENoS 2009/13Google Scholar
- Davis DR (1998) The home market, trade, and industrial structure. Am Econ Rev 88: 1264–1276Google Scholar
- Fujita M, Krugman P, Venables AJ (2001) The spatial economy. MIT press, LondonGoogle Scholar
- Helpman E (1998) The size of regions. Working Paper 14-95, The Foerder Institute for Economic ResearchGoogle Scholar
- Takayama T, Judge GG (1971) Spatial and temporal price and allocation models. North Holland, AmsterdamGoogle Scholar
- Von Thünen JH (1826) Der isolierte staat. Partial english translation (1966) Von Thünen’s Isolated State. Pergamon Press, OxfordGoogle Scholar