In contrast to what several papers have argued recently, we show that firm heterogeneity fosters agglomeration of economic activity. If firms are more similar with respect to their total factor productivity, each company faces a lower propensity to export. This renders the home market more...

In contrast to what several papers have argued recently, we show that firm heterogeneity fosters agglomeration of economic activity. If firms are more similar with respect to their total factor productivity, each company faces a lower propensity to export. This renders the home market more...

This paper considers the racetrack economic approach, where manufacturing activities are distributed continuously. We seek constant-access equilibria and show that smooth equilibrium distributions are always unstable for almost all transport cost functions, whereas agglomeration in 1 or 2 atomic...

How does intranational factor mobility shape the welfare effects of a trade shock? I provide evidence that during WWI, a demand shock emanated from belligerent countries and affected neutral Spain. Within Spain, labor predominantly reallocated locally, while the most affected provinces...

The present paper studies labour migration in the enlarged EU. Adopting the Krugman’s framework of the New Economic Geography, we are able to study both the determinants of labour migration, such as market potential, wages, cost of living on one hand, and labour migration on the other hand...

We extend the standard economic geography model by introducing regional differences in technology levels and by assuming that initial technological gaps may be closed only when the learning capabilities of the lagging region are sufficiently developed. Interregional knowledge spill-overs take...

This paper studies the social desirability of agglomeration and the efficiency arguments for policy intervention in a 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...

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...

The question regarding the effects of changing transports costs on the size distribution of cities is an important topic of systems of cities research. The so-called New Economic Geography has already given some answers to this question. One central assumption in this kind of model is a very...

The last one and a half centuries have witnessed dramatic changes in the world economy. The service (tertiary) sector, which at the beginning of the 20th century was of little importance relative to agriculture and manufacturing, has become the dominant sector today, accounting for 80% and more...