Working Paper: CEPR ID: DP3752
Authors: Philippe Monfort; Tanguy Van Ypersele
Abstract: In this Paper, we develop a two country four region model allowing for a core periphery pattern inside countries. We then examine how both the integration and the agglomeration process inside a given country affects the pattern of specialization and international trade. We also analyse how agglomeration process interact from one country to the other and in particular how agglomeration forces in one country is affected by the spatial distribution of activity in the partner country.The main results of the analysis are the following: (i) agglomeration proves to be a source of comparative advantages in the industries featuring economies of scale on condition that this agglomeration process is driven by market forces; (ii) both integration and agglomeration in one country reduces the likelihood to observe agglomeration in the partner country.
Keywords: integration; international trade; regional agglomeration
JEL Codes: F12; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| market-driven agglomeration (R32) | enhanced comparative advantages (F11) |
| integration and agglomeration within one country (F15) | diminished likelihood of agglomeration in partner country (F12) |