We develop a two-region population growth model of economic geography and show that a process of urbanization has a substantial impact on the evolution of manufacturing real wages. Whereas real wages decline as the population increases when the spatial structure of the economy is fixed, they...

We compare the impact of falling transport costs, borne by firms, and decreasing tariffs, borne by either firms or consumers, on the regional distribution of economic activities. Our main result shows that tariffs and tranport costs play symmetric roles in that a decrease in either of them...

We develop a spatial general equilibrium model in which the absence of trade is an endogenous outcome and we show that trade is not a necessary condition for agglomeration to arise. More precisely, extending the model developed by Ottaviano et al. [13], we show that equilibria without trade...

We study the impacts of changes in international trade and domestic transport costs on the internal geography of countries in the presence of geographical asymmetries.

This chapter surveys recent developments in agglomeration theory within a unifying framework. We highlight how locational fundamentals, agglomeration economies, the spatial sorting of heterogeneous agents, and selection effects affect the size, productivity, composition, and inequality of...

This chapter surveys recent developments in agglomeration theory within a unifying framework. We highlight how locational fundamentals, agglomeration economies, the spatial sorting of heterogeneous agents, and selection effects affect the size, productivity, composition, and inequality of...

Large cities produce more output per capita than small cities. This higher productivity may occur because more talented individuals sort into large cities, because large cities select more productive entrepreneurs and firms, or because of agglomeration economies. We develop a model of systems of...

Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities attract the most productive agents, select the best of them, and make the selected ones even more productive via various agglomeration economies. This paper provides a...

Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities attract the most productive agents, select the best of them, and make the selected ones even more productive via various agglomeration economies. This paper provides a...