Agglomeration and cross-border infrastructure

This paper deals with the effects of cross-border transport infrastructure in the presence of agglomeration economies. Cross-border infrastructure is more likely to increase than to decrease inequalities between and within regions, and has not helped regional convergence in Europe. Under-investment due to spillovers, coordination failures, and the inadequacy of networks originally designed for national markets provide a role for supranational institutions. Hub-and-spoke networks tend to increase urban primacy while cross-border transport connections tend to reduce it. Improvements in transport and communication allow firms to separate innovation, management and production, increasing efficiency and urban interdependence.