Working Paper: CEPR ID: DP2102
Authors: Rikard Forslid
Abstract: This paper suggests a simple modification of the core-periphery model by Krugman (1991), which makes the model easy to solve analytically. We use the modified model to analyse the tendencies for geographical agglomeration of manufacturing industry as regions integrate economically. Two cases of human capital mobility and physical or knowledge capital moblity are treated separately. In the human capital case the model behaves qualitatively just as the core-periphery model, where manufacturing tends to agglomerate for low trade costs. In the physical capital case, on the contrary, agglomeration will not occur as a consequence of economic integration.
Keywords: Economic Geography; Agglomeration; Capital Mobility
JEL Codes: F12; F15; F21; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| human capital mobility (J62) | increased agglomeration (R11) |
| physical capital mobility (F20) | absence of agglomeration (R32) |