6533b831fe1ef96bd12983d2
RESEARCH PRODUCT
Regional Inequality and Product Variety
Kristian BehrensKristian BehrensJacques-françois ThisseJacques-françois Thissesubject
Offset (computer science)InequalityEconomies of agglomerationmedia_common.quotation_subjectEconometricsEconomicsRange (statistics)Product (category theory)Fixed costIndustrial organizationVariable costHome market effectmedia_commondescription
We investigate how differences in set-up costs of various types affect the trade-off between global efficiency and spatial equity and show that the standard assumption of symmetry in fixed costs masks the existence of an interesting effect: the range of available varieties varies depends on the spatial distribution of firms. In such a setting, even when the market outcome leads to excessive agglomeration under symmetric fixed costs, a planner opts for asymmetric fixed costs and more agglomeration. The reason is that the losses induced by more agglomeration are offset by the gains due to additional product variety.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2005-01-01 | SSRN Electronic Journal |