6533b7d3fe1ef96bd126129f

RESEARCH PRODUCT

Agglomeration without trade: how non-traded goods shape the space-economy

Kristian Behrens

subject

Urban StudiesMicroeconomicsEconomics and EconometricsMonopolistic competitionGeneral equilibrium theoryEconomies of agglomerationEconomicsSpace (commercial competition)Outcome (game theory)

description

Abstract We develop a spatial general equilibrium model in which the absence of interregional trade is an endogenous outcome. Extending the model developed by Ottaviano, Tabuchi, and Thisse (Int. Econ. Rev. 43 (2002) 409), we show that equilibria without trade differ significantly from those obtained in the presence of trade, which suggests that the presence of non-traded goods has a significant impact on spatial structures. Somewhat surprisingly, equilibrium structures without trade are richer than those with trade because partial agglomeration becomes a feasible outcome. Equilibria now depend on the ratio of mobile to immobile factors and an increase in that ratio triggers a process of spatial agglomeration.

yearjournalcountryeditionlanguage
2004-01-01Journal of Urban Economics
https://doi.org/10.1016/j.jue.2003.06.003