Working Paper: CEPR ID: DP13638
Authors: Carl Gaigny; Jacques-François Thisse
Abstract: In this chapter, we provide a bird-eye overview of recent developments in NEG within a unifying framework. We build on the idea that the difference in the economic performance of regions depend on the global and local interactions between and within regions through the locational decisions made by firms and households at the macro and microspatial levels. We also focus on settings that take into account the urban structure, the social and skill composition and the sectorial specialization of regional agglomerations, and the quality of urban life. Three types of spatial frictions are considered, that is, transport costs, commuting costs, and communication costs.
Keywords: new economic geography; cities; transport costs; commuting costs; communication costs; land rent; manufacturing; goods; services
JEL Codes: L12; O14; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Lower commuting costs (R48) | Higher urban density (R23) |
| Higher urban density (R23) | Enhanced economic performance (O49) |
| Urban costs (R29) | Dispersion of economic activities (R12) |
| Decrease in transport costs (R41) | Increase in agglomeration of firms and consumers (R32) |
| Increase in agglomeration (R11) | Concentration of economic activity (R12) |
| Spatial frictions (transport, commuting, communication costs) (R12) | Locational decisions of firms and households (R30) |
| Locational decisions of firms and households (R30) | Economic performance of regions (R11) |