The purpose of this paper is to analyze, in the light of recent contributions of New Economic Geography models, the spatial consequences of transport cost reductions. So far, the role of transport costs have been only partially unveiled, since papers focused either on the Dixit-Stiglitz-Iceberg...

In this paper, we have developed a model that sets out to explain the existence of megacities in developing countries, in the context of a Krugman-type core-periphery model. The paper also suggests that agglomeration can be fostered by manufacturers mainly serving the domestic market. However,...