SPATIAL AGGLOMERATION AND DISPERSION:REVISITING THE HELPMAN MODEL

This paper presents a modified Helpman model (1998) with an added tradable agriculture good, and modifies the manufacturing production function according to Forslid and Ottaviano (2003) to identify all possible spatial configurations of a two-region economy. Moreover, the current work neatly separates the four spatial shaping effects: market size effect, market crowding effect, cost of living effect, and urban congestion effect, and diagrammatically exposes how these forces shape spatial configurations as the degree of trade freeness increases.