Working Paper: CEPR ID: DP7063
Authors: Masahisa Fujita; Jacques-François Thisse
Abstract: Paul Krugman has clarified the microeconomic underpinnings of both spatial economic agglomerations and regional imbalances at national and international levels. He has achieved this with a series of remarkably original papers and books that succeed in combining imperfect competition, increasing returns, and transportation costs in new and powerful ways.Yet, not everything was brand new in New Economic Geography. To be precise, several disparate pieces of high-quality work were available in urban economics and location theory. Our purpose in this paper is to shed new light on economic geography through the lenses of these two fields of economics and regional science.
Keywords: economic geography; location theory; trade; urban economics
JEL Codes: F12; L13; R12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic agglomeration (R11) | regional imbalances (R11) |
| large economic agglomerations (R11) | significant inequalities across regions (R12) |
| low transport costs (L91) | concentration of firms in core regions (R32) |
| concentration of firms in core regions (R32) | home market effect (R31) |
| home market effect (R31) | exacerbation of regional inequalities (R11) |
| high transport costs (L91) | symmetric distribution of economic activity (D39) |
| labor mobility + capital mobility (F20) | influence on regional growth patterns (R11) |
| migration (F22) | amplification of agglomeration effects (R11) |
| amplification of agglomeration effects (R11) | reinforcement of spatial inequalities (R12) |