Pflüger, Michael; Suedekum, Jens - 2021
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 … intermediate range of trade costs, the market equilibrium yields the socially optimal degree of agglomeration. An important …