nep-geo New Economics Papers
on Economic Geography
Issue of 2004‒12‒12
34 papers chosen by
Vassilis Monastiriotis
London School of Economics

  2. RURAL-URBAN MIGRATION IN BOLIVIA: AN ESCAPE BOAT? By Maria Tannuri-Pianto; Donald Pianto; Omar Arias
  4. The geography of innovation: the effects of university research By Barrrio,T.; García-Quevedo,J.
  5. Were Spanish migrants attracted by industrial agglomerations? An analysis for the interwar years in the light of the new economic geography. By Pons,J.; Silvestre,J.; Tirado,D.; Paluzie,E.
  6. Why Does Educational Attainment Differ Across U.S. States? By Lutz Hendricks
  7. Political Economy of Commuting Subsidies By Rainald Borck; Matthias Wrede
  8. Estimating the General Equilibrium Benefits of Large Changes in Spatially Delineated Public Goods By Holger Sieg; V. Kerry Smith; H. Spencer Banzhaf; Randy Walsh
  9. Price dispersion:  The role of distance, borders and location By Mario Crucini; Chris Telmer; Marios Zachariadis
  10. Spatial Competition in the Network Television Industry By Ronald Goettler; Ron Shachar
  11. Spatial distribution of investment in Russia: the effect of agglomeration By Valentina Lapo
  12. Regional Reallocation of Russian Industry in Transition By Elizaveta Shevyakhova; Oleg Rytchkov
  13. Development of Regional Labour Markets under Enterprise Restructuring Process By Tatyana Chetvernina; Irina Soboleva; Svetlana Lomonosova
  14. Russian 'Macro-Regions': Economic Integration and Interaction with the World Economy By Alexander Granberg; Victor Suslov; Evgenia Kolomak
  15. Migrations and Macroeconomic Processes in Post-socialist Russia: Regional Aspect By Igor Korel; Liudmila Korel
  16. What Determines Crime in Russian Regions? By Yury Andrienko
  17. Technological Diversity and Jacobs' Externality Hypothesis Revisited By Ejermo, Olof
  18. Spatial Inventor Networks As Studied by Patent Coinventorship By Ejermo, Olof; Karlsson, Charlie
  19. Process Innovations in a Duopoly with Two Region By Ejermo, Olof; Johansson, Börje
  20. The Importance of Accessibility to R&D on Patent Production in Swedish Municipalities By Gråsjö, Urban
  21. Towards a Dynamic Theory for the Spatial Knowledge Economy By Karlsson, Charlie; Johansson, Börje
  22. Convergence Across Italian Regions and the Role of Technological Catch-Up By Marco Maffezzoli
  23. FDI in Space: Spatial Autoregressive Relationships in Foreign Direct Investment By Bruce A. Blonigen; Ronald B. Davies; Glen R. Waddell; Helen T. Naughton
  24. Sectoral and Geographical Specificities in the Spatial Structure of Economic Activities By Giulio Bottazzi, Giovanni Dosi, Giorgio Fagiolo, Angelo Secchi
  25. Regional Differences in Socio-Economic Health Inequalities in Spain By Pilar García Gómez; Ángel López
  26. Regional Inequality in India: A Fresh Look By Nirvikar Singh; Laveesh Bhandari; Aoyu Chen; Aarti Khare
  27. Market Size, Differentiated Scale Economies and Interindustry Trade By Roehlano M. Briones
  28. Effect of a School Finance Reform on Housing Stock and Residential Segregation: Evidence from Proposal A in Michigan By Joydeep Roy
  29. Convergence in West German Regional Unemployment Rates By Christian Bayer; Falko Juessen
  30. Urban Area Development in Stochastic Cellular Automata By Ivan Mulianta; Yun Hariadi
  31. Geographical Concentration and Economic Growth: Do Externalities Matter? By Mihai Nica
  32. On the Function of Two Variables of Urban Population Density By Ovidiu Racorean
  33. South-South Trade : Geography Matters By Souleymane Coulibaly; Lionel Fontagné
  34. Horizontal mergers in the circular city : a note By Andreea Cosnita

  1. By: Joaquim J. M. Guilhoto
    Abstract: Following Furtuoso and Guilhoto (2003) the GDP of the Brazilian Agribusiness is estimated to be around 27% of the Brazilian GDP in 2000, and the latest numbers show that it could be reaching 30% of the Brazilian GDP in 2003. Despite its importance for the Brazilian economy as a whole, the size of the Brazilian territory and the regional differences draws attention for the fact that the importance of the agribusiness is not uniform over the Brazilian regions, and if the agribusiness is also divided into its four components, i.e., a) inputs to agriculture; b) agriculture; c) agriculture based industry; and d) final distribution, the differences are even bigger. In this paper it is made a study of the importance of the agribusiness for the 27 states of the Brazilian economy, taking into consideration its four components. The analysis is conduct for the year of 1999 using an interregional input-output system constructed for the Brazilian economy by Guilhoto et al. (2004).
    JEL: R15 O13 Q10
    Date: 2004
  2. By: Maria Tannuri-Pianto; Donald Pianto; Omar Arias
    Abstract: This paper studies rural-urban migration in Bolivia. Domestic migration usually works as an equalization mechanism, in which regions with fewer economic opportunities send migrants to more dynamic regions. We model the migration decision and take into account the possibility of self-selection for computing the returns to migration. We present selectivity corrected quantile regression models for earnings of both migrants and non-migrants in urban and metropolitan areas. We find that migrants receive a premium at low and median quantiles of the urban/metro conditional earnings distribution. This premium is somewhat diminished by a negative selectivity correction for migrants with lower probabilities of migration.
    JEL: R23 C14 J24
    Date: 2004
  3. By: Eduardo Amaral Haddad; Fernando Salgueiro Perobelli
    Abstract: In this paper, we focus on the regional (intra-national) impacts of barriers to trade, in the form of tariffs, in a national economy. More specifically, we are concerned with the spatial impediments for the internal transmission of the potential benefits of trade liberalization, in the form of high transportation costs that the more remote regions face. A cost-competitiveness approach, base don relative changes in the sectoral and regional cost and demand structures, is adopted to isolate the likely spatial effects of further tariff reductions in Brazil. It tackles the three basis for the analytical framework proposed in the literature: comparative advantage is grasped through the use of differential regional production technologies; geographical advantage is verified through the explicit modeling of the transportation services and the costs of moving products based on origin-destination pairs, as well as increasing returns associated to agglomeration economies; and cumulative causation appears through the operation of internal and external multipliers and interregional spillover effects in comparative-static experiments, such as those proposed here.
    JEL: R13 F17
    Date: 2004
  4. By: Barrrio,T.; García-Quevedo,J. (Universitat de Barcelona)
    Abstract: Applied studies on the relationship between geography and technological innovation for United States, Germany, France and Italy have shown the positive effects that academic research exerts on the innovate output of firms at spatial level. The purpose of this paper is to look for new evidence on the possible effects of the university research for the case of Spain. To do so, within the framework of a Griliches-Jaffe knowledge production function, and using panel data and count models, the relationship between innovate inputs and patents, in the case of the Spanish regions is explored.
    Keywords: Hysteresys, panel unit root tests, structural break
    JEL: O30 O18 R30 R58
    Date: 2004
  5. By: Pons,J.; Silvestre,J.; Tirado,D.; Paluzie,E. (Universitat de Barcelona)
    Abstract: In this paper we examine whether access to markets had a significant influence on migration choices of Spanish internal migrants in the inter-war years. We perform a structural contrast of a New Economic Geography model that focus on the forward linkage that links workers location choice with the geography of industrial production, one of the centripetal forces that drive agglomeration in the NEG models. The results highlight the presence of this forward linkage in the Spanish economy of the inter-war period. That is, we prove the existence of a direct relation between worker's localization decision and the market potential of the host regions. In addition, the direct estimation of the values associated with key parameters in the NEG model allow us to simulate the migratory flows derived from different scenarios of the relative size of regions and the distances between them. We show that in Spain the power of attraction of the agglomerations grew as they increased in size, but the high elasticity es timated for the migration costs reduce the intensity of internal migrations flow. This could help to explain the apparently low intensity of inernal migrations in Spainin Spain until its upsurge during thye 1920s. This also explains the geography of migrations in Spain during this perios, which hardly affected such as Andalusia, Estremadura and Castile-La Mancha) but had an intense effect on the provinces nearest to the principal centres of industrial development
    Keywords: Hysteresys, panel unit root tests, structural break
    JEL: N63 N64 N93 F14 F15
    Date: 2004
  6. By: Lutz Hendricks
    Abstract: The fraction of persons holding a college degree differs nearly two-fold across U.S. states. This paper documents data related to state educational attainment differences and explores possible explanations. It shows that highly educated states employ skillbiased technologies, specialize in skill-intensive industries, but do not pay lower skill premia than do less educated states. Moreover, measures of urbanization and population density are positively related to educational attainment. Theories based on agglomeration economies offer natural explanations for these observations.
    Keywords: education, agglomeration
    JEL: J24 R11
    Date: 2004
  7. By: Rainald Borck; Matthias Wrede
    Abstract: We study the political economy of commuting subsidies in a model of a mono-centric city with two income classes. Depending on housing demand and transport costs, either the rich or the poor live in the central city and the other group in the suburbs. Commuting subsidies increase the net income of those with long commutes or high transport costs. They also affect land rents and therefore the income of landowners. The paper studies how the locational pattern of the two income classes and the incidence of landownership affects the support for commuting subsidies.
    Keywords: commuting subsidies, voting, monocentric city
    JEL: R14 R48
    Date: 2004
  8. By: Holger Sieg; V. Kerry Smith; H. Spencer Banzhaf; Randy Walsh
    Abstract: The purpose of this paper is to report a new approach for measuring the general equilibrium willingness to pay for large changes in spatially delineated public goods such as air quality. We estimate the parameters of a locational equilibrium model and compute equilibria for alternative scenarios characterizing the availability of public goods within a system of communities. We construct welfare measures which take into consideration the adjustments of households in equilibrium to non-marginal changes in public goods. We apply this framework to analyze willingness to pay for reductions in ozone concentrations in Southern California between 1990 and 1995. The results suggest that partial equilibrium welfare gains can be offset by housing price increases in communities which experience the largest improvements in air quality. Similarly, prices can decrease in communities with small improvements in public good provision. An analysis which ignores households' relocations in response to large changes in public good provision and the resulting price adjustments is therefore likely to yield biased estimates of the distribution of welfare gains.
  9. By: Mario Crucini; Chris Telmer; Marios Zachariadis
    Abstract: We study deviations from the Law-of-One-Price using microeconomic data on the retail prices of approximately 220 individual goods and services across 122 cities located in 79 countries over the period from 1990 to 2000.
    Date: 2003–12
  10. By: Ronald Goettler; Ron Shachar
    Abstract: We present an empirical study of spatial competition and a methodology to estimate demand for products with unobservable characteristics. Using panel data, we estimate a discrete choice model with latent product attributes and unobserved heterogenous consumer preferences. Our application of the methodology to the network television industry yields estimates that are consistent with experts' views. Given our estimates, we compute Nash equilibria of a product location game, and find that firms' observed strategies (such as the degree of product differentiation) are generally optimal. Discrepancies between actual and optimal strategies reflect the networks' adherence to "rules of thumb," and possibly, bounded rationality behavior.
  11. By: Valentina Lapo
    Abstract: The goal of this project is the explanation of spatial distribution of investment in Russia during the transition to a market economy. The influence of agglomeration and investor expectations on investment in the real sector of the economy are analyzed. A theoretical model is constructed, which describes an increase in investment concentration. An empirical test of hypothesis is conducted. The results provide useful recommendations for regional investment policies.
    Keywords: investment, agglomeration, expectation, concentration of production, regions
    JEL: R12
    Date: 2003–04–03
  12. By: Elizaveta Shevyakhova; Oleg Rytchkov
    Abstract: In this paper we suggest to use a 'new economic geography' paradigm for explanation of regional reallocation of industrial employment in Russia in 1985-1999. We construct a new economic geography" type model adjusted to specific features of Russian economy. This model gives a counterfactual distribution of industry across regions and allows us to construct a theoretical factor NEGF which is supposed to predict real changes in allocation of industrial employment. Our analysis of empirical data shows that NEGF indeed has a predictive power and this result is valid for a sufficiently wide range of model specifications.
    Keywords: Russia, new economic geography, industry allocation
    JEL: R11 R12
    Date: 2004–07–13
  13. By: Tatyana Chetvernina; Irina Soboleva; Svetlana Lomonosova
    Abstract: This project is aimed at assessing and comparing the influence of enterprise restructuring on employment and labor practices in several industrial regions of Russia. Analysis will be based on survey data compiled over the last six years as well as future data the authors intend to collect.
    Date: 1998–04–05
  14. By: Alexander Granberg; Victor Suslov; Evgenia Kolomak
    Abstract: The project focuses on the contemporary state of five Russian macro-regions - European Russia, the Urals, Western Siberia, Eastern Siberia and the Far East - and their immediate perspectives for trade and economic integration in both an inter-regional and an international context. The study uses an open economy model, looking at its current state and short-term dynamics. The authors employ input-output models for 30 industries and five regions as well as economic equilibrium and cooperative game theory.
    Date: 1998–04–05
  15. By: Igor Korel; Liudmila Korel
    Abstract: The project centers on the effect of macroeconomics factors on inter-regional migration in Russian, using regression analysis and discriminant analysis. The motivation focuses on understanding migration in order to choose appropriate policies to influence it. The key question is whether the emerging pattern of migration provides evidence that a pro-market (labor market) mechanism is emerging. The authors hope to differentiate market-motivated migration from "catastrophic" migration such as flight from Chechnya or emigration after the Sakhalin earthquake.
    Date: 2000–04–05
  16. By: Yury Andrienko
    Abstract: What were the causes of the criminal waves that have accompanied the transition in Russia during the 90s? The usual suspects are poverty, income inequality, unemployment, in particular among young people, excessive alcohol consumption, inconsistency in reform and the inability of the authorities to combat crime. Based on data for 77 Russian regions, this econometric study focuses on the different socio-economic, demographic and other indicators in order to identify the major determinants of crime.
    Date: 2002–04–05
  17. By: Ejermo, Olof (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. Recent empirical evidence strongly supports Jacobs’ (1969) externality hypothesis, that urban diversity provides a more favorable environment for economic development. In order to correctly gauge Jacobs’ hypothesis, economic development should be understood as a result of innovations. Furthermore, it is argued that a relevant diversity-measure should take into account the degree of diversity between the inherent classes (e.g. pharmaceuticals are closer to chemicals than to forestry). These ideas are tested using regionally classified Swedish patent application data as a measure of innovativeness. Patent data are also used to reflect technological diversity. The results show that the number of patent applications in Swedish regions is highly and positively dependent on regional technological specialization, quite the opposite to Jacobs’ prediction. The paper raises general questions about earlier empirical results. It is concluded that the size of regions is important is an important factor to consider, since this in itself may affect patenting intensity and technological diversity.
    Keywords: Specialization; diversity; patenting; Sweden; regions
    JEL: H41 O31 O40 R12
    Date: 2004–11–29
  18. By: Ejermo, Olof (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: We study the structure of the spatial inventor networks in Sweden by examining the residence of inventors and coinventors in Swedish patent applications to the European Patent Office. Several factors are found to influence the spatial affinity. We find that spatial affinity is strongly influenced by the general size of the nodes, as measured by population. In addition, affinities are strongly influenced by distance, but different technologies responded differently to distance. The most distance-sensitive technology, i.e. with the highest agglomeration of coinventors, was almost three times as sensitive to distance as the least sensitive. Interestingly, "Information technology" was the least distance-sensitive technology, which would be in line with predictions of "the death of distance". Higher affinity was also registered for many technologies when more university researchers were employed in one of the regions. Hence, a technology division is appropriate for understanding the span of innovation networks over regions, and how these could develop in response to policy initiatives.
    Keywords: Inventor networks; localization; patents; Sweden; affinity
    JEL: O31 O32 R12
    Date: 2004–11–29
  19. By: Ejermo, Olof (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: Most models of duopolies with a spatial dimension refer to the 'linear' or 'circular' city. Moreover, in duopoly models with innovations, the spatial dimension is usually dropped. We bridge this gap by constructing a model with two regions, each hosting production of a differentiated quality (high and low quality). In addition, consumers are heterogeneous with different willingness to pay for quality. The analysis focuses on the incentives for process innovations which affect the unit cost of production. The model is used to analyze two common trends in the urbanization process and their effects on the incentive for process innovations. The first is increased transportation costs and worsened interregional accessibility (the result is reversed for a decrease in transportation costs). We find that such changes increase the amount of process R&D more in the region producing a low-quality good than in the region producing a high-quality good. Second, we examine the effect on optimal process R&D of moving consumers from the region producing low-quality goods to the region producing high-quality goods. This lowers the optimal amount of process R&D undertaken in the region producing the low-quality good, while it is raised in the other region.
    Keywords: Regional agglomeration; process innovations; duopoly
    JEL: C72 L13 O31 R30
    Date: 2004–11–29
  20. By: Gråsjö, Urban (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The main purpose in this paper is to study to what extent accessibility to R&D can explain patent production. Therefore a knowledge production function is estimated both on aggregated level and for different industrial sectors. The output of the knowledge production is the number patent applications in Swedish municipalities from 1994 to 1999. In order to account for the importance of proximity, the explanatory variables are expressed as accessibilities to university and company R&D. The total accessibility is then decomposed into local, intra-regional and inter-regional accessibility to R&D. The results indicate that high accessibility (local) to company R&D has the greatest effect on patent production. Local accessibility to university R&D has also a significant positive effect but the magnitude is smaller. There is also evidence that intra-regional accessibility to company R&D affects patent production positively.
    Keywords: Innovations; patents; R&D; knowledge production functions
    JEL: H41 O33 R11
    Date: 2004–12–02
  21. By: Karlsson, Charlie (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Johansson, Börje (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: In recent decades the world has witnessed the emergence of a global knowledge economy. For example, the evolution in recent decades of the developed economies has been accompanied by a regional shift in economic activity away from traditional industrial regions to new agglomerations of high technology, creating an explosion of entrepreneurial activity and new firm formation. For the OECD countries in particular, we can observe a transfer from an industrial economy to a knowledge economy. The supporting evidences are overwhelming and indicate that the trend is global. The emerging knowledge economy have attracted much interest among economist and generated many important contributions during the last two decades. However, the literature does not provide a comprehensive picture and we are indeed lacking a “general theory” of the knowledge economy. Various aspects of the emerging knowledge economy has been thoroughly analysed both theoretically and empirically but the overall synthesis is not yet present. Something to ask for would be a coherent theoretical framework that can explain how growth-induced investments in knowledge production stimulate localised, entrepreneur-driven innovations, which generate structural change and economic growth in an integrated system of functional regions. An interesting observation is that many of the necessary building blocks already seem to exist but that they are still waiting for someone to integrate them. The current state-of-the-art also includes inconsistent components. The purpose of this paper is to contribute to such an integration of the existing pieces of knowledge.
    Keywords: Knowledge; Economic Growth; New Economic Geography; Innovation Systems; Entrepreneurship
    JEL: M13 O31 O40 R11
    Date: 2004–12–02
  22. By: Marco Maffezzoli
    Abstract: This paper suggests that the main (and possibly unique) source of ?? and ?? convergence in GDP per worker (i.e. labor productivity) across Italian regions over the 1980-2000 period is the change in technical and allocative efficiency, i.e. convergence in relative TFP levels. To reach this conclusion, I construct an approximation of the production frontier at different points in time using Data Envelope Analysis (DEA), and measure efficiency as the output-based distance from the frontier. This method is entirely data-driven, and does not require the specification of any particular functional form for technology. Changes in GDP per worker can be decomposed in changes in relative efficiency, changes due to overall technological progress, and changes due to capital deepening. My results suggest that: (i) differences in relative TFP are quantitatively important; (ii) while technological progress and capital deepening are the main, and equally important, forces behind the rightward shift in the distribution of GDP per worker, convergence in relative TFP is the main determinant of the change in the distribution’s shape.
  23. By: Bruce A. Blonigen; Ronald B. Davies; Glen R. Waddell; Helen T. Naughton
    Abstract: Theoretical models of foreign direct investment (FDI) have only recently begun to model the role of third countries, and the empirical FDI literature has almost exclusively examined bilateral FDI data without recognizing the potential interdependence between FDI decisions to alternative host countries. This paper uses spatial econometric techniques to examine the spatial correlation between FDI to alternative (neighboring) regions. The sign of such correlations can provide evidence for or against alternative theories for FDI motivations. Using data on OECD countries from 1980-2000, we find evidence consistent with export platform FDI in Europe.
    JEL: F21 F23
    Date: 2004–12
  24. By: Giulio Bottazzi, Giovanni Dosi, Giorgio Fagiolo, Angelo Secchi
    Abstract: This work explores the spatial structure of location of production activities. We try to disentangle location- from sector-specific drivers in the dynamic process of spatial agglomeration. We argue that the former typically apply "horizontally" (i.e. across all industrial sectors), while the latter unfold in the form of non-decreasing dynamic returns to the current stock of installed business units. A stochastic model of location is developed and three different specifications are tested against Italian data on the location of manufacturing firms. Our results suggest that different locations exert different structural influences on the distribution of production activities. Moreover, a widespread horizontal power of "urbanization", which makes particular locations more attractive irrespectively of the sector, does emerge. However, after controlling for the latter, one is still left with sector-specific forms of dynamic increasing returns to agglomeration, which vary a lot across different manufacturing activities.
    Keywords: Industrial Location, Agglomeration, Markov Chains, Dynamic Increasing Returns.
  25. By: Pilar García Gómez; Ángel López
    Abstract: This paper reports an analysis of income related health inequalities at the Autonomous Community level in Spain using the self assessed health measure in the 2001 edition of the Encuesta Nacional de Salud. We use recently developed methods in order to cardinalise and model self assessed health within a regression framework, decompose the sources of inequality and explain the observed differences across regions. We find that the regions with the highest levels of mean health tend to enjoy the lowest degrees of income related health inequality and vice-versa. The main feature characterizing regions where income related health inequality is low is the absence of a positive gradient between income and health. In turn, the regions where income related health inequality is greater are characterized by a strong and significant positive gradient between health and income. These results suggest that policies aimed at eliminating the gradient between health and income can potentially lead to greate r reductions in socio-economic health inequalities than policies aimed at redistributing income.
    Keywords: Health inequalities, decomnposition analysis, Spain
    JEL: D63 I12 C21
    Date: 2004–03
  26. By: Nirvikar Singh (University of California, Santa Cruz); Laveesh Bhandari (Indicus Analytics); Aoyu Chen (University of California, Santa Cruz); Aarti Khare (Indicus Analytics)
    Abstract: There are concerns that regional inequality in India has increased after the economic reforms of 1991. This concern is supported by various statistical analyses. In this paper, we show that the conclusions are sensitive to what measures of attainment are used. In particular, human development indices do not show the same increase in regional inequality. Furthermore, looking at consumption and credit indicators for regions disaggregated below the state level also suggests that inequality trends may not be as bad as suggested by State Domestic Product data, although the greater strength of the economies of the western and southern states emerges in our results. Finally, we briefly discuss policy implications within the context of India’s evolving federal polity.
    Keywords: regional inequality, federalism, human development
    JEL: D63 H73 O10 O53
    Date: 2004–12–07
  27. By: Roehlano M. Briones (WorldFish Center)
    Abstract: A stylized pattern of interindustry trade between developing and developed regions identifies the former as specialists in light manufactures and latter in heavy manufactures. Conventional explanations for this pattern rely on the factor proportions model, which is empirically suspect. This paper proposes an alternative model that relies on the interaction between scale economies and domestic market size. Unlike standard increasing returns analysis, the model provides a rich yet tractable characterization of variations in scale economies across industries. The model, in applying a limit pricing framework to the open economy, offers a new approach to analyzing imperfect competition and interregional trade.
    Keywords: Interindustry trade, increasing returns, imperfect competition
    JEL: F12 R12
    Date: 2004–12–08
  28. By: Joydeep Roy (Economic Policy Institute)
    Abstract: Local financing of public schools in the U.S. leads to a bundling of two distinct choices - residential choice and school choice - and increases the degree of socioeconomic segregation across school districts. A school finance reform can go a long way in weakening this link. In this paper I study the Michigan school finance reform of 1994 (Proposal A) which resulted in a comprehensive equalization of per pupil expenditures. Using panel data on Michigan K-12 districts and data from the decennial censuses I investigate whether the reform had any significant effects on spatial segregation. I find that Proposal A has been responsible for increases in housing stock and property values in the lowest spending school districts, and for improvements in several socioeconomic indicators, implying a decline is neighborhood sorting. However, there is continued high demand for residence in the highest spending communities, which points to the importance of neighborhood peer effects (‘local’ social capital).
    Keywords: School finance reform, spatial segregation, Tiebout sorting, peer effects.
    JEL: I2 R2
    Date: 2004–12–05
  29. By: Christian Bayer (European University Institute, Department of Economics, Florence); Falko Juessen (Faculty of Economic & Social Science, University of Dortmund)
    Abstract: Differences in regional unemployment rates are often used to describe regional economic inequality. This paper asks whether changes in regional unemployment differences in West Germany are persistent over time. Only if such changes are persistent, the differences are a sensible measure of inequality and only then can policies be effective that aim at lowering the dispersion of unemployment rates. Our analysis follows a time-series approach to economic convergence and we test whether unemployment differences between regions are stationary or not. While univariate tests show that changes in unemployment differences are persistent, more powerful panel tests find them to be only transitory. However, these tests reveal only a moderate speed of convergence. Since there is a structural break following the second oil crisis, we also employ unit-root tests that allow for such break. Again we find strong evidence for convergence and now also the speed of convergence is found to be very high.
    Keywords: stochastic convergence, unemployment, structural break, unit root
    JEL: R
    Date: 2004–11–30
  30. By: Ivan Mulianta (Bandung Fe Institute); Yun Hariadi (Bandung Fe Institute)
    Abstract: Urban is still an interesting topic to discuss whether in government or public studies. As economy grows in cities, many people are attracted to come to cities from villages to try their luck. In this paper, we investigated urban area development using von Thunen’s economic location theory. By using stochastic Cellular Automata which views land location as agents that will change their states in agriculture, industry, and service series, here we show how the urban areas dominated by economy, industry, and service activities develop to their surroundings and form areas with typical activities with urban area. Even for the farther agriculture area from urban center, von Thunen’s theory is still valid.
    Keywords: von Thunen’s Theory, urban, Stochastic Cellular Automata, Markov matrices
    JEL: R
    Date: 2004–12–06
  31. By: Mihai Nica (Jackson State University)
    Abstract: Regardless of the reasons leading to its formation, it is widely accepted that geographical concentration of economic activity triggers increases in productivity. However, there are almost no studies that analyze the relationship between geographical concentration and economic growth. Moreover, when looking at the relationship between geographical concentration and productivity, past research almost unanimously modeled the underlying externality based on a scale measure (size) or an index. Starting from the assumption that the influence of geographical concentration on growth can be best modeled taking in consideration an intensive measure, such as population density, as an indicator of externalities, this study uses a growth accounting framework to assess the effect of geographical concentration on economic growth. It finds population density to be a good candidate for evaluating the externality influence, since a significant portion of the variation in economic growth over U.S. counties and BEA regions is explained by differences in population density.
    Keywords: Economic growth, Externalities, Geographical concentration, Spatial models
    JEL: R
    Date: 2004–12–06
  32. By: Ovidiu Racorean (Graduate Academy of Economic Studies, Bucharest, Romania)
    Abstract: This paper is a pure theoretical attempt to explain tendencies revealed in the last decade urban researches, such as decentralization of population toward the cities suburbs, formation of polycentric cities, by a process of alteration of city traditional monocentricity, in time, due to the growth of population. It is shown that the process of alteration of monocentricity is governed by a function of two variables of urban population density. The function is developed following the observation that urban population density is dependent, in the same time, both on distance-falling with the distance from the city center- and on time-growing with the increase of population size in cities area. The city model based on the function of two variables also predicts other interesting urban phenomena, such as cities ‘’collision’’.
    Keywords: urban population density, population growth, monocentric city model,polycentricity, decentralization of population.
    JEL: R
    Date: 2004–12–08
  33. By: Souleymane Coulibaly (DEEP-HEC et TEAM); Lionel Fontagné (CEPII et TEAM)
    Abstract: Intra-subsaharan African trade appears to be very low, an outcome that is often justified on the grounds of the size of the exporting and the importing economies. If that were the explanation, there would be no untapped trade potential. We argue instead that the main determinant of this "missing trade" is geography. Being landlocked (and poor) translates into very high trade costs. In this paper, we try to measure the impact of geographical impediments on South-South trade. We focus on the intra and extra regional trade of the countries belonging to the West African Economic and Monetary Union, which have been involved in an integration process since the early days of their independence. We derive and estimate an Armington-based model in order to evaluate the impact ofgeographical impediments on bilateral trade flows within this region.We alternatively and simultaneously use COMTRADE and West AfricanEconomic and Monetary Union data to perform these estimations.
    Keywords: South-South trade, landlocked, transport infrastructure, border infrastructure
    JEL: F11 F15 O55
    Date: 2004–04
  34. By: Andreea Cosnita (EUREQua)
    Abstract: We investigate the profitability and locational effects of two-firm Cournot mergers in the circular city. As compared with the linear market, we find that mergers turn out to be unprofitable much earlier.
    Keywords: Horizontal merger, endogenous location, circular city
    JEL: D43 L13
    Date: 2004–02

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