structure. The advantage of the Helpman-Hanson model is that it incorporates the fact that agglomeration of economic activity … spreading force that allows for less extreme agglomeration patterns than predicted by the bulk of new economic geography models …

This paper analyses in the framework of a 2-region economic geography model the impact of transfers on agglomeration of … agglomeration than subsidies to consumers (social policy). Second, if a less developed region starts its catch up process first … increasing and afterwards decreasing transfers are necessary to avoid agglomeration. Due to these results east Germany?s slowdown …