Borck, Rainald; Koh, Hyun-Ju; Pflüger, Michael - 2009
. When regions weigh workers' and capitalists' welfare equally, the core region will set its subsidy low enough that the … industry relocates to the larger region, restoring an efficient allocation. When workers' welfare is weighted more heavily, the … core may pay subsidies that are high enough to prevent a relocation of industry. -- agglomeration ; asymmetric regions …