The purpose of this paper is twofold. First, we present a new 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...

In a world of globalisation, it is tempting to foresee the 'death of distance' and, once the impediments to mobility have declined sufficiently, to wait for the predictions of the neo-classical theory of factor mobility to materialise. According to this theory, production factors respond to...

Firms are more productive on average in larger cities. Two main explanations have been offered: firm selection (larger cities toughen competition, allowing only the most productive to survive) and agglomeration economies (larger cities promote interactions that increase productivity), possibly...