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...

This paper explores how the interaction between firm heterogeneity, urban costs and transport costs determines spatial configuration across regions within a simple general-equilibrium model. We spot light on how firm heterogeneity affects the centrifugal and centripetal forces and reshapes the...