We incorporate the now standard knowledge-capital model of multinational firms in a new economic geography setting. The theoretical predictions of our model suggest that unskilled labor mobility leads to less concentration of production than skilled labor mobility does. This is in line with...

In this paper, we derive and estimate a New Economic Geography model for the Colombian departments.2 We first derive an econometric specification relating wages to a distance weighted sum of the volumes of economic activities of the surrounding locations. Them, we test our econometric...

The division of labor between and within countries is driven by two fundamental forces, comparative advantage and increasing returns. We set up a simple Ricardian model with a Marshallian input sharing mechanism to study their interplay. The key insight that emerges is that the interaction...

This paper investigates how the interactions between product differentiation, transport costs and urban costs determine spatial inequality in a general-equilibrium model. We shed light on the interrelation between different definitions of home market effect (HME) in literature. While the wages...

The question regarding the effects of changing transports costs on the size distribution of cities is an important topic of systems of cities research. The so-called New Economic Geography has already given some answers to this question. One central assumption in this kind of model is a very...

Economic integration affects economic development through two main channels: growth and localization of the economic activities. The theories of endogenous growth and economic geography enable us to understand these mechanisms. We study in this paper their similarities and specificities before...

The division of labor between and within countries is driven by two fundamental forces, comparative advantage and increasing returns. We set up a simple Ricardian model with a Marshallian input sharing mechanism to study their interplay. The key insight that emerges is that the interaction...

The comparative advantage of many cities is based on their efficiency in the production of "functions", e.g., business services such as finance, law, engineering, or similar functions that are used by firms in a wide range of sectors. Firms that use these functions may choose to source them...

New economic geography models analyze agglomeration and dispersion forces, whose interactions determine the spatial distribution of economic activity. We introduce consumers' taste differences in the model by Ottaviano et al. (2002), and we argue that this allows us to represent an additional...

The notion of 'polycentric city system' is currently receiving growing attention as a basic element of the 'European Spatial Policy'. From this perspective, both agglomeration and economic integration have to be reinterpreted on a wider geographical scale. This is of interest of the s.c....