This paper investigates the impact of labor markets and economies of agglomeration on firms location. We show that the existence of a lower bound on wage (e.g. a minimum wage or a reservation wage) introduces asymmetric location of firms. Moreover, changes in that lower bound or in global...

In the Dixit-Stiglitz model of monopolistic competition, entry of firms is socially too small. Other authors have shown that excess entry is also a possibility with other preferences for diversity. We show that the cost structure and workers's rents can also explain excess entry.

This paper investigates the impact of labor markets and economies of agglomeration on firms location. We show that the existence of a lower bound on wage (e.g. a minimum wage or a reservation wage) introduces asymmetric location of firms. Moreover, changes in that lower bound or in global...