Post by Sapphire Capital on Dec 11, 2008 0:54:40 GMT 4
Agglomeration and Growth: The Effects of Commuting Costs
Antonio Accetturo
Bank of Italy
October 17, 2008
Bank of Italy Temi di Discussione (Working Paper) No. 688
Abstract:
We present a model of industrial location and endogenous growth with congestion costs. According to the interplay between knowledge spillovers and commuting costs, we are able to obtain both a Krugman-type and a bell-shaped agglomeration outcome. In the first case, the economy experiences a permanent income inequality in the steady state and income divergence in the transitional dynamics. In the second case, we observe an enlargement of the industrial core of the economy with a strong catching up by the periphery. Welfare analysis shows that congestion create (in the bell-shaped agglomeration case) a negative welfare effect on peripheral unskilled workers and renders the agglomerated equilibrium Pareto inferior to dispersion.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1290543_code606534.pdf?abstractid=1290543&mirid=3
Antonio Accetturo
Bank of Italy
October 17, 2008
Bank of Italy Temi di Discussione (Working Paper) No. 688
Abstract:
We present a model of industrial location and endogenous growth with congestion costs. According to the interplay between knowledge spillovers and commuting costs, we are able to obtain both a Krugman-type and a bell-shaped agglomeration outcome. In the first case, the economy experiences a permanent income inequality in the steady state and income divergence in the transitional dynamics. In the second case, we observe an enlargement of the industrial core of the economy with a strong catching up by the periphery. Welfare analysis shows that congestion create (in the bell-shaped agglomeration case) a negative welfare effect on peripheral unskilled workers and renders the agglomerated equilibrium Pareto inferior to dispersion.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1290543_code606534.pdf?abstractid=1290543&mirid=3