On Pitchforks and Tomahawks

18 Pages Posted: 3 Nov 2008

See all articles by Michael Pflüger

Michael Pflüger

University of Passau; IZA Institute of Labor Economics; German Institute for Economic Research (DIW Berlin)

Jens Suedekum

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)

Abstract

The core-periphery model by Krugman (1991) has two 'dramatic' implications: catastrophic agglomeration and locational hysteresis. We study this seminal model with CES instead of Cobb-Douglas upper tier preferences. This small generalization suffices to change these stark implications. For a wide range of parameters we find that the model exhibits instead a smooth and easily reversible transition from symmetry to agglomeration.

Keywords: core-periphery model, new economic geography, agglomeration, bifurcation pattern

JEL Classification: F12, F15, F22, R12, R50

Suggested Citation

Pflüger, Michael and Südekum, Jens, On Pitchforks and Tomahawks. IZA Discussion Paper No. 3258, Available at SSRN: https://ssrn.com/abstract=1294510 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Michael Pflüger (Contact Author)

University of Passau ( email )

Innstrasse 27
Passau, 94032
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

German Institute for Economic Research (DIW Berlin)

Mohrenstrasse 58
Berlin, 10117
Germany

Jens Südekum

Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE) ( email )

Universitaetsstr. 1
Duesseldorf, NRW 40225
Germany

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

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