This paper studies how firm heterogeneity in terms of productivity affects the balance between agglomeration and … endogenous markups. It shows that firm heterogeneity matters. However, whether it shifts the balance from agglomeration to … `evenness'. Accordingly, the role of firm heterogeneity in selection models of agglomeration can not be fully understood without …

Empirical studies consistently report that labour productivity and TFP rise with city size. The reason is that cities … agglomeration economies. This paper provides a microeconomically founded model of vertical city differentiation in which the latter … two mechanisms (`agglomeration' and `selection') operate simultaneously. Our model is both rich and tractable enough to …

cross-section OLS and dynamic panel GMM estimation. Agglomeration is measured alternatively through measures of urbanization … sets and variable definitions, we find evidence that supports the "Williamson hypothesis": agglomeration boosts GDP growth …

productivity premium. Using a model of heterogeneous firms that can move between regions, Baldwin and Okubo (2006) show how more … intensive. As a result, our model can produce sorting to the large regions from both ends of the productivity distribution …. Firms with high capital intensity and high productivity as well as firms with very low productivity and low capital …

differentials in what we call real market potential, a discounted sum of demands derived from the theory. …

’) effects, and we provide a theory-based specification that suggests how to test the home market effect in such a general …

governing the organization of economic space. Other standard lines of research in location theory are also discussed while …

the hub, with better reciprocal access to spoke nations than to each other. Further liberalization induces agglomeration …