Pflüger, Michael; Suedekum, Jens - 2021
simple, analytically solvable "new economic geography" model with two trade integrating regions. The location pattern … emerging as market equilibrium is "bubble-shaped", i.e. it features dispersion of firms both at high and low trade costs and … trade costs. Our central finding is that the market equilibrium is characterised by over-agglomeration for high trade costs …