Economic Integration and Agglomeration in a Middle Product Economy

CORE Discussion Paper No. 2004/15

31 Pages Posted: 28 Mar 2007

See all articles by Shin Kun Peng

Shin Kun Peng

Academia Sinica - Institute of Economics

Jacques-François Thisse

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

Ping Wang

Washington University in St. Louis - Department of Economics; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: 2004

Abstract

The paper examines the interactions between economic integration and population agglomeration in a middle product economy displaying neoclassical growth. There are two vertically integrated economies. Each consists of a large number of final good competitive firms operating plants in both regions, and a large number of intermediate goods monopolistically competitive firms operating each in only one region. While immobile workers are employed with intermediate goods to produce the final good, mobile workers are used to design the line of differentiated intermediate-good inputs. Capital is immobile, the final good is non-traded, whereas the intermediate goods are traded. We find that employment agglomeration and output growth need not be positively related. Furthermore, trade is not necessarily beneficial to regional growth, whereas trade between the two regions need not be associated with a widened skilled-unskilled wage gap.

Keywords: economic integration, agglomeration, intermediate goods

Suggested Citation

Peng, Shin Kun and Thisse, Jacques-François and Wang, Ping, Economic Integration and Agglomeration in a Middle Product Economy (2004). Available at SSRN: https://ssrn.com/abstract=971574 or http://dx.doi.org/10.2139/ssrn.971574

Shin Kun Peng (Contact Author)

Academia Sinica - Institute of Economics ( email )

128 Academia Road, Section 2
Nankang
Taipei, 11529
Taiwan

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

Ping Wang

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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