Worldwide trade flows are dominated by high-productivity firms, that have a large range of products. Since the product range of firms reflects partly trade flows, it is a source of economic differences in space. In this paper, I analyze the effects of the product mix of firms on agglomeration. I...

There is a large literature on the existence of agglomeration economies, as shown in the surveys by Moomaw (1983) or Gerking (1993). The benefits of these economies arise from multiple sources, but some negative externalities might also emerge. Within the hierarchical urban system, cities at...

The division of labor between and within countries is driven by two fundamental forces, comparative advantage and increasing returns. We set up a simple Ricardian model with a Marshallian input sharing mechanism to study their interplay. The key insight that emerges is that the interaction...

Using a simple two-region model with the positive and negative effects of labor heterogeneity, we investigate the agglomeration pattern of entrepreneurs and the commuting pattern of heterogeneous workers. Labor heterogeneity is a source of productivity for e.g. high-tech industries as well as is...

This paper revisits a classical inquiry by addressing the question of localization and urbanization economies. We propose that specialization and diversity may offer externalities operating at different spatial scales. Using high-resolution geo-coded plant-level panel data for Swedish cities...

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...

Using a simplified NEG model, we investigates the relation between labor diversity and agglomeration. In the theoretical part, we assume the following two-region model. Homogenous consumption goods are produced using a constant returns technology with homogenous capital and heterogenous workers....