Working Paper: NBER ID: w3740
Authors: Paul R. Krugman
Abstract: This paper develops models of spatial equilibrium in which a central metropolis emerges to supply manufactured goods to an agricultural hinterland. The location of the metropolis is not fully determined by the location of resources: as long as it is not too far from the geographical center of the region, the concentration of economic mass at the metropolis makes it the optimal location for manufacturing firms, and is thus self-justifying. The approach in this paper therefore helps explain the role of historical accident and self-fulfilling expectations in metropolitan location.
Keywords: Urban Economics; Spatial Equilibrium; Metropolitan Location
JEL Codes: R12; R13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| concentration of manufacturing firms (L69) | urban growth (R11) |
| urban growth (R11) | concentration of manufacturing firms (L69) |
| location of manufacturing firms (R30) | emergence of urban centers (N93) |
| historical factors (B15) | concentration of manufacturing firms (L69) |
| self-fulfilling expectations (D84) | emergence of urban centers (N93) |
| market access (L17) | concentration of manufacturing firms (L69) |