Martin, Philippe; Ottaviano, Gianmarco - C.E.P.R. Discussion Papers - 1996
This paper presents a model in which growth and geographic agglomeration of economic activities are mutually self … reinforcing processes. Industrial agglomeration in one location spurs growth because it reduces the cost of innovation in that … location through a pecuniary externality due to transaction costs. Growth fosters agglomeration because as the sector at the …