This paper studies (European) regional policy from the perspective of the new economic geography. On the basis of a critical examination of the prevailing literature, we develop a simple model which implies a particularly plausible development of the industrial structure when trade integration...

This paper studies the social desirability of agglomeration and the efficiency arguments for policy intervention in a simple, analytically solvable ‘new economic geography’ model with two trade integrating regions. The location pattern emerging as market equilibrium is...

The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide...

This paper studies the social desirability of agglomeration and the efficiency arguments for policy intervention in a simple, analytically solvable ‘new economic geography’ model with two trade integrating regions. The location pattern emerging as market equilibrium is “bubbleshaped”,...

This paper studies the social desirability of agglomeration, and the efficiency arguments for policy intervention in a simple, analytically tractable new economic geography model. The location pattern emerging as market equilibrium is 'bubble-shaped', i.e. it features dispersion both at high and...

Models of the new economic geography share a number of common conclusions, but also exhibit notable differences, in particular with respect to the shape of the location pattern and the efficiency of the market equilibrium. This reflects the fact that these models rely heavily on specific...

Taking the perspective of the new economic geography, this paper studies trade policy and the rationale to deviate from free trade, in particular. It is shown that protectionism, through unilaterally favorable under some circumstances, does not lead to welfare gains, in general. A list of...

We analyze non-cooperative commodity taxation in a symmetrictwo-country trade model characterized by monopolisticcompetition and international firm and capital mobility. In thissetting, taxes in one country affect foreign welfare through therelocation of mobile firms and through changes in the...