We investigate the role of skill heterogeneity in explaining location patterns induced by pecuniary externalities (Krugman (1991)). In our setting, sellers with higher skills perform better in the marketplace, and their sales are larger. Selling to distant locations leads to lower sales because...

This paper tackles the issue of the optimality of agglomeration in a two-region economy with skilled/mobile and unskilled/immobile workers. The market leads to the optimal outcome when transport costs are high or low. However, for intermediate values, it yields agglomeration whereas dispersion...

Innovation is a crucial driver of urban and regional economic success. Innovative cities and regions tend to grow faster and have higher average wages. Little research, however, has considered the potential negative consequences: as a small body of innovators gain relative to others, innovation...

The purpose of this paper is two-fold. First, we present a model of agglomeration and trade that displays the main features of the recent economic geography literature, while allowing for the derivation of analytical results by means of simple algebra. Second, we show how this framework can be...

We address the fundamental question arising in economic geography: why do economic activities agglomerate in a small number of places? The main reasons for the formation of economic clusters involving firms and/or households are analysed: (i) externalities under perfect competition; (ii)...

This paper considers the location effects of geographically-discriminatory trade policy. A preferential move towards a customs union attracts industry to the integrating countries. When internal barriers fall below some critical level, input-output links between imperfectly competitive firms...

This paper constructs a two-region endogenous growth model, where economic geography and public infrastructures play a key role. The model allows us to analyse the contribution of different types of redistributive public policies on growth, industrial geography and spatial income distribution....

This paper suggests a simple modification of the core-periphery model by Krugman (1991), which makes the model easy to solve analytically. We use the modified model to analyse the tendencies for geographical agglomeration of manufacturing industry as regions integrate economically. Two cases of...

This paper uses a full-scale CGE-model - calibrated on 1992 data - to investigate the effects of European integration on the location of industrial production. Our results reveal large differences among individual industries. Industries with high scale elasticities typically display a...

This paper describes the possible impact of multi-speed integration on the location of economic activities in Europe. We present a model where two countries integrate their economies and leave a third temporarily outside because of its lower income. We analyse the effect of different integration...