We study the effects of a decrease in trade costs on the spatial distribution of industry in a multi-regional economy, when a rise in the regional population of workers generates higher urban costs. When the number of cities is unaffected by falling trade costs, small cities become smaller for...

We investigate firms' incentives to locate in the same region to gain access to a large pool of skilled labour. Firms engage in risky R&D activities and thus create stochastic product and implied labour demand. Agglomeration in a cluster is more likely in situations where the innovation step is...

This Paper focuses on two distinct facets of globalization: the decrease in the trade costs of goods and the decline of communication costs between headquarters and production facilities within firms. When the unskilled have about the same wage in the two regions, the decrease of these costs...

Increasing returns in matching between skilled workers and firms create a local thick-market externality when labour markets are geographically segmented. This generates an agglomeration force that can offset the dispersion force due to local competition in a segmented product market. When this...

When firms cluster in the same local labour market, they face a trade-off between the benefits of labour pooling (i.e., access to workers whose knowledge helps reduce costs) and the costs of labour poaching (i.e., loss of some key workers to competition and the indirect effect of a higher wage...

We consider an economic geography model in which all firms and workers are mobile, but the agglomeration of firms and workers within a region generates urban costs. We show that industries with high transport costs tend to be more agglomerated than industries with low transport costs. This is to...

Based on the estimation of a theoretically consistent gravity equation, together with a careful computation of transportation costs across countries and industries, the Paper first provides estimates of ‘border effects’ among EU countries. The second objective is to examine the reasons for...