University Librarian Centre | University of Cagliari
UniCA Eprints

Agglomeration and growth with endogenous expenditure shares

Cerina, Fabio - Mureddu, Francesco (2008) Agglomeration and growth with endogenous expenditure shares. Working Paper. CRENoS, Cagliari.

[img]
Preview
PDF
445Kb

Official URL: http://crenos.unica.it/crenos/files/WP%2008-20%20d...

Abstract

We develop a New Economic Geography and Growth model which, by using a CES utility function in the second-stage optimization problem, allows for expenditure shares in industrial goods to be endogenously de- termined. The implications of our generalization are quite relevant. In particular, we obtain the following novel results: 1) catastrophic agglom- eration may always take place, whatever the degree of market integration, provided that the traditional and the industrial goods are su¢ ciently good substitutes; 2) the regional rate of growth is a¤ected by the interregional allocation of economic activities even in the absence of localized spillovers, so that geography always matters for growth and 3) the regional rate of growth is a¤ected by the degree of market openness: in particular, depend- ing on whether the traditional and the industrial goods are good or poor substitutes, economic integration may be respectively growth-enhancing or growth-detrimental.

Item Type:Technical Report / Working Paper / Project Report (Working Paper)
Publisher:CRENoS
Date:2008
Institution:Universita' degli Studi di Cagliari
Divisions:Centri > CRENoS Centro Ricerche Economiche Nord Sud
Subjects:Area 13 - Scienze economiche e statistiche > SECS-P/01 Economia politica
Uncontrolled Keywords:new economic geography; endogenous expenditure shares; substitution effect
ID Code:400
Deposited On:03 Nov 2009 15:29

Repository Staff Only: item control page