Integration, Agglomeration and the Political Economics of Factor Mobility

CEPR Working Paper No. 2185

Posted: 10 Jan 2000

See all articles by Gianmarco I.P. Ottaviano

Gianmarco I.P. Ottaviano

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Date Written: July 1999

Abstract

This paper tackles the issue of the optimality of agglomeration in a two-region economy with skilled/mobile and unskilled immobile workers. The market leads to the optimal outcome when transport costs are high or low. However, for intermediate values, it yields agglomeration whereas dispersion is socially desirable. We show that competitive lobbying on factor mobility by the two groups of workers sustains the second best optimum.

JEL Classification: F12, F22, R13, R38

Suggested Citation

Ottaviano, Gianmarco I.P. and Thisse, Jacques-François, Integration, Agglomeration and the Political Economics of Factor Mobility (July 1999). CEPR Working Paper No. 2185. Available at SSRN: https://ssrn.com/abstract=176748

Gianmarco I.P. Ottaviano (Contact Author)

Bocconi University - Department of Economics and Paolo Baffi Centre on Central Banking and Financial Regulation ( email )

Via Gobbi 5
Milan, 20136
Italy

Jacques-François Thisse

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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