The Footloose Entrepreneur Model with a Finite Number of Equidistant Regions

International Journal of Economic Theory (2018)

28 Pages Posted: 17 Feb 2018 Last revised: 26 Apr 2019

See all articles by José M. Gaspar

José M. Gaspar

Researcher; Catholic University of Portugal (UCP) - Catolica Lisbon School of Business and Economics; Universidade do Porto - CEF.UP - Center for Economics and Finance at UP

Sofia B.S.D. Castro

Universidade do Porto - Faculdade de Economia (FEP); Universidade do Porto - Centro de Matemática da Universidade do Porto (CMUP)

João Correia‐da‐Silva

University of Toulouse 1 - Toulouse School of Economics (TSE)

Date Written: December 1, 2017

Abstract

We study the Footloose Entrepreneur model with a finite number of equidistant regions, focusing on the analysis of stability of three types of long-run equilibria: agglomeration, dispersion and partial dispersion. We find that, as the number of regions increases, there is more tendency for agglomeration and less tendency for dispersion. In the limit, as the number of regions tends to infinity, agglomeration becomes the unique stable equilibrium. Our conclusions are robust to any dependence of the total number of entrepreneurs and unskilled workers on the number of regions. Numerical evidence suggests that industry cannot disperse evenly among two regions when other regions have no industry. Finally, we introduce region heterogeneity in unskilled labour and obtain a more general condition for stability of agglomeration. We then study the impacts of regional asymmetries and find that having more unskilled workers in the core (or less in the periphery) increases the tendency for agglomeration.

Keywords: Core-Periphery, Footloose Entrepreneur, Finite number of Regions, Agglomeration

JEL Classification: R10, R12, R23

Suggested Citation

Gaspar, José Maria and Castro, Sofia B.S.D. and Correia‐da‐Silva, João, The Footloose Entrepreneur Model with a Finite Number of Equidistant Regions (December 1, 2017). International Journal of Economic Theory (2018). Available at SSRN: https://ssrn.com/abstract=3119063 or http://dx.doi.org/10.2139/ssrn.3119063

José Maria Gaspar (Contact Author)

Researcher ( email )

Universidade Católica Portuguesa
Rua Diogo Botelho 1327
Porto, 4169-005
Portugal

Catholic University of Portugal (UCP) - Catolica Lisbon School of Business and Economics ( email )

Rua de Diogo Botelho, 1327
Porto, 4169-005
Portugal

Universidade do Porto - CEF.UP - Center for Economics and Finance at UP ( email )

Rua Dr. Roberto Frias
Porto, 4200-464
Portugal

HOME PAGE: http://cefup.fep.up.pt/

Sofia B.S.D. Castro

Universidade do Porto - Faculdade de Economia (FEP) ( email )

Rua Dr. Roberto Frias
s/n
4200-464 Porto, 4200-464
Portugal

Universidade do Porto - Centro de Matemática da Universidade do Porto (CMUP) ( email )

Rua do Campo Alegre
Porto
Portugal

João Correia‐da‐Silva

University of Toulouse 1 - Toulouse School of Economics (TSE) ( email )

Place Anatole-France
Toulouse Cedex, F-31042
France

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