We analyze the equilibrium and the optimal resource allocations in a monocentric city under monopolistic competition. Unlike the constant elasticity of substitution (CES) case, where the equilibrium markups are independent of the city size, we present a variable elasticity of substitution (VES)...

We investigate the importance of market size as a determinant for industrial location patterns. In order to focus on a broad range of sectors,including the service industries, both traded and non-traded goods are taken into consideration. In our model, traded goods industries always exhibit a...

We investigate how international trade and trade policy possibly affect the regional distribution of economic activities within a country involved in a process of economic integration. Our analysis reveals that the impact of decreasing international trade costs on the spatial distribution of...

We investigate the role of the transport sector in structuring the location of economic activity within two-region economic geography models of the footloose capital and core-periphery types. In our setting, competitive carriers offer transport services for shipping manufactured goods across...

We develop an economic geography model in which mobile skilled workers choose between working in the production sector or becoming part of an unproductive political elite. The elite sets tax rates on skilled and unskilled workers to maximize its own welfare by extracting rents, thereby...

We develop a model of commodity tax competition with monopolistically competitive internationally mobile firms, transport costs, and asymmetric country sizes. We investigate the impacts of non-cooperative tax setting, as well as of tax harmonization and changes in the tax principle, in both the...

We investigate where cities are located in a spatial economy and why they tend to get "locked-in" at particular sites. Building on Fujita and Krugman (1995) we show that geography and/or transportation technology must exhibit some "non-smoothness" for cities to possibly become "locked-in" in...

We develop a two-region population growth model of economic geography and show that a process of urbanization has a substantial impact on the evolution of manufacturing real wages. Whereas real wages decline as the population increases when the spatial structure of the economy is fixed, they...

We extend Krugman's (1980) two-country two-sector model to a setup with arbitrary numbers of countries and sectors. The extended model predicts an adequately defined "home market effect" only after controlling for cross-country differential accessibility through a theory-based linear filter. We...

We investigate how differences in set-up costs of various types affect the trade-off between global effciency and spatial equity and show that the standard assumption of symmetry in fixed costs masks the existence of an interesting effect: the range of available varieties varies depends on the...