A Simple Model of Economic Geography a La Helpman-Tabuchi

22 Pages Posted: 18 Jul 2005

See all articles by Yasusada Murata

Yasusada Murata

Nihon University - Advanced Research Institute for the Sciences and Humanities

Jacques-François Thisse

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

Date Written: February 2005

Abstract

This paper explores the interplay between commodities' transportation costs and workers' commuting costs within a general equilibrium framework a la Dixit-Stiglitz. Workers are mobile and choose a region to work in as well as an intra-urban location in which to live. We show that a more integrated economy need not be more agglomerated. Instead, low transportation costs lead to the dispersion of economic activities. This is because workers are able to alleviate the burden of urban costs by being dispersed, while retaining a good access to all varieties. By contrast, low commuting costs foster the agglomeration of economic activities.

Keywords: Commuting costs, urban costs, transportation costs, economic geography, agglomeration

JEL Classification: F12, R12

Suggested Citation

Murata, Yasusada and Thisse, Jacques-François, A Simple Model of Economic Geography a La Helpman-Tabuchi (February 2005). CEPR Discussion Paper No. 4936. Available at SSRN: https://ssrn.com/abstract=763585

Yasusada Murata

Nihon University - Advanced Research Institute for the Sciences and Humanities ( email )

Tokyo
Japan

Jacques-François Thisse (Contact Author)

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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