nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒11‒12
fourteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. European Regional Convergence in a Human Capital Augmented Solow Model By Hans-Friedrich Eckey; Christian Dreger; Matthias Türck
  2. Regional Integration and Internal Economic Geography - an Empirical Evaluation with Portuguese Data By Nuno Crespo; Maria Paula Fontoura
  3. Dispersed Interactions of Urban Residents By Bazhanov, Andrei; Hartwick, John
  4. The role of Entrepreneurial Universities in interfacing Competitive Advantages: The Case of Beira Interior region (Portugal) By Ferreira, Joao; Leitao, Joao; Raposo, Mario
  5. Can Information Asymmetry Cause Agglomeration? By Berliant, Marcus; Kung, Fan-chin
  6. El Paso Property Tax Abatement Ineffectiveness By Fullerton, Thomas; Aragones-Zamudio, Victor
  7. Prospects for a unified urban general equilibrium theory By Berliant, Marcus
  8. Geography and Electronic Commerce: Measuring Convenience, Selection, and Price By Chris Forman; Anindya Ghose; Avi Goldfarb
  9. Econometric Evidence Regarding Education and Border Income Performance By Almada, Christa; Blanco-Gonzalez, Lorenzo; Eason, Patricia; Fullerton, Thomas
  10. When Does Co-location of Manufacturing and R&D Matter? By Mikko Ketokivi
  11. The Geography of Trade on eBay and MercadoLibre By Ali Hortaçsu; F. Asís Martínez-Jerez; Jason Douglas
  12. Regional welfare weights By Erhun KULA
  13. Cost-benefit analysis and EU cohesion policy By Andrea MAIRATE; Francesco ANGELINI
  14. Precios hedónicos para valoración de atributos de viviendas sociales en la Región Metropolitana de Santiago By Quiroga, Bernardo F.

  1. By: Hans-Friedrich Eckey (Department of Economics, University of Kassel); Christian Dreger (DIW, Berlin); Matthias Türck (Department of Economics, University of Kassel)
    Abstract: In this paper, the process of productivity convergence is investigated for the enlarged European Union using regional (NUTS-2) data. The Solow model extended by human capital is employed as a workhorse. Alternative strategies are proposed to control for spatial effects. All specifications confirm the presence of convergence with an annual speed between 3 and 3.5 percent towards regional steady states. Furthermore, a geographically weighted regression approach indicates a wide variation in the speed of convergence across the regions, where a higher speed is striking in particular in France and the UK. Clusters of convergence can be identified, where regions with high convergence also have high initial income levels.
    Keywords: Solow model, regional convergence, spatial lags, spatial filtering
    JEL: C21 O47 R11 R15
    Date: 2006–10
  2. By: Nuno Crespo; Maria Paula Fontoura
    Abstract: The effects of the reduction of international trade costs on the internal economic geography of each country have been very scarcely studied in empirical terms. With data for Portugal since its adhesion to the European Union, we test the hypotheses put forward by the new economic geography concerning the evolution of the spatial concentration of the manufacturing industry as a whole and of the different industries individually considered. We consider alternative concentration concepts and data disaggregated both at the level of NUTS III (28 regions) and concelhos (275 regions). Results show a dispersion of total industry as a consequence of the reduction of international trade costs, in line with Krugman and Elizondo (1996)’s prediction. Individual industries show a similar tendency, in contrast with the theoretical hypothesis.
    Keywords: trade liberalization; industrial location; Portugal.
    JEL: F12 F15 R12
  3. By: Bazhanov, Andrei; Hartwick, John
    Abstract: Beckmann's interaction model has each resident touching base in face-to-face activity with every other resident at the other's residence per unit time. We re-work his resulting ''interaction city'' with each resident ''operating with'' a Cobb-Douglas utility function. Similar but somewhat ''richer'' outcomes occur. We also investigate a new case with intermediate dispersion of face-to-face activity, one with scale economies in trip-making.
    Keywords: Household spatial interactions; Dispersed residential activity
    JEL: R14 D11
    Date: 2006–11–09
  4. By: Ferreira, Joao; Leitao, Joao; Raposo, Mario
    Abstract: This paper reveals the importance of a local entrepreneurial university in interfacing competitive advantages, by assuming the condition of most influent and dynamic engine of regional development. The strategic diagnosis provides the identification of a dominant quadrant in the TOWS matrix application to the Beira Interior region, which is dominated by Mini-Maxi strategies. For improving the competitive positioning of that region, the transition from the dominant quadrant (Mini-Maxi) to the most desirable quadrant (Maxi-Maxi) is also proposed. In this sense, the University assumes a fundamental role in the design and in the promotion of the proposed set of strategic actions, which should be implemented in two critical areas: traditional activities and tourism; and entrepreneurship and innovation. In terms of future research, the same analytical tool could be applied to other regions with a similar competitive profile, in order to obtain comparative analyses and to better calibrate the TOWS Matrix.
    Keywords: Entrepreneurship; Regional Development; Strategy.
    JEL: M13 R11
    Date: 2006–10–10
  5. By: Berliant, Marcus; Kung, Fan-chin
    Abstract: Various models, such as those used in the New Economic Geography, employ combinations of agglomerative and repulsive forces to generate equilibria with cities and agglomeration. Can classical asymmetric information in the labor market, in the form of adverse selection, result in an equilibrium that features agglomeration of agents? We use a model with two types, high and low ability, and two locations. The high type dislikes work more than the low type. Firms in both locations have the same technology for production of a single consumption commodity. They know the distribution of types, but the type of a particular agent is private information to that agent. The firms compete with both potential entrants and firms in the other location. Firms offer labor contracts that specify wages based on hours worked. In equilibrium, zero profit, voluntary participation, and incentive compatibility constraints must be satisfied along with feasibility. A further stability requirement is imposed, that the equilibrium be immune to small locational deviations of consumers. We have functional forms and some relatively mild restrictions on parameters such that the equilibrium separates types by location. Thus, high and low skilled workers agglomerate separately. This can be induced as a comparative static change from a symmetric equilibrium to an asymmetric one by varying some of the exogenous parameters.
    Keywords: Adverse selection; Agglomeration
    JEL: R13 D82 R12
    Date: 2006–10–31
  6. By: Fullerton, Thomas; Aragones-Zamudio, Victor
    Abstract: Similar to many communities throughout the United States, the City of El Paso, Texas utilizes property tax abatements as a means for inducing companies to invest in the local economy. Abatements in El Paso were first introduced in 1988. Although many studies have examined the effectiveness of municipal abatement policies, most of those efforts rely on survey questionnaires or cross-sctional data. This study employs a time series data set to examine whether municipal authorities have achieved the objectives of the abatement program in El Paso.
    Keywords: Municipal property tax abatements; metropolitan development; applied econometrics
    JEL: R11 H25
    Date: 2006
  7. By: Berliant, Marcus
    Abstract: This is a short essay on open questions in urban economic theory.
    Keywords: Urban General Equilibrium Theory; Universal Commodity Space
    JEL: R13 D60 D51
    Date: 2006–08–06
  8. By: Chris Forman (Tepper School of Business); Anindya Ghose (Stern School of Business, New York University); Avi Goldfarb (Rotman School of Management, University of Toronto)
    Abstract: We develop a formal model of online-offline substitution to identify three factors that drive consumers to purchase online: convenience, selection, and price. This model builds hypotheses on how features of offline retail supply impact online purchasing. We then examine how the local availability of offline retail options drives use of the online channel and consequently how the convenience, selection, and price advantages of the online channel may vary by geographic location. In particular, we examine the effect of local store openings on online book purchases in that location. We explore this problem using data from Amazon on the top selling books for 1501 unique locations in the US for 10 months ending in January 2006. In addition to this data, we use information on changes in local retail competition as measured by openings of large specialty bookstores such as Borders or Barnes & Noble and discount stores such as Wal-Mart or Target. We show that even controlling for product-specific preferences by location, changes in local retail options have substantial effects on online purchases. We demonstrate how the convenience, selection, and price benefits of the Internet are different for customers in different types of locations. More generally, we show that geography significantly impacts the benefit that consumers derive from electronic markets.
    Date: 2006–09
  9. By: Almada, Christa; Blanco-Gonzalez, Lorenzo; Eason, Patricia; Fullerton, Thomas
    Abstract: This study examines the relationship between education and income in Texas counties that are located along the border with Mexico. Estimation results confirm ealrier research results for this region. Parameter heterogeneity underscores the increased importance of education in the service-oriented labor market that has emerged in recent years in the United States. Simulation results quantify the income gains that could potentially be realized if drop out rates were lowered in the border counties included in the sample.
    Keywords: Education; Texas border incomes; applied econometrics.
    JEL: J38 R11
    Date: 2006
  10. By: Mikko Ketokivi
    Keywords: location decisions, co-location, functional integration, organization theory
    JEL: D21 L23 M11 O32 R32
    Date: 2006–11–03
  11. By: Ali Hortaçsu (University of Chicago and NBER); F. Asís Martínez-Jerez (Harvard Business School); Jason Douglas
    Abstract: We analyze geographic patterns of trade using transactions data from eBay and MercadoLibre, two large online auction sites. We find that distance continues to be an important deterrent to trade between geographically separated buyers and sellers, though at a lesser extent than has been observed in studies of non-Internet commerce. We also find a strong “home bias” towards trading with counterparties located in the same city. Further analyses suggest that cultural factors and the possibility of direct contract enforcement in case of breach are the main reasons behind the same city bias.
    Date: 2006–09
  12. By: Erhun KULA
    Abstract: Pareto welfare criterion based on people’s willingness to pay for a project’s output is regarded by many as a narrow interpretation of improvement in social well-being. A broader opinion is that even though poorer individuals may be less able to pay for a particular benefit, they may obtain greater utility from it. In line with the broader opinion, this paper looks at country based welfare weights in the European Union with a special emphasis on relatively poor countries who became members recently. Welfare weights now have a high policy profile in the European Union in relation to distribution of funds between member and member to be countries. They can also be used in cost-benefit analysis to give priority to infrastructure projects in underprivileged areas
    Keywords: Cost-Benefit Analysis, Regional welfare weights, Income Distribution, EU Structural Funds
    JEL: D61 D70 R10 R50
    Date: 2006–10
  13. By: Andrea MAIRATE; Francesco ANGELINI
    Abstract: In the context of scarce EU budgetary resources and strained public finances, cost-benefit analysis (CBA) plays a crucial role in assisting policymakers’ public investment decisions. The purpose of this paper is to draw lessons from the CBA experience under the Structural and Cohesion Funds to date. The paper reviews the main developments over the last decade, highlighting the role played by the Commission in helping foster a sound project appraisal culture in the member states. It also points out the relevance of CBA in assisting the allocation of EU funds across projects. Particularly, it is shown how the new method that will be used to determine the level of Community assistance should prevent the crowding out of other sources of finance by increasing the leverage effect and creating incentives for attracting private capital. Finally, the paper will discuss the main policy implications in terms of affordability and sustainability issues.
    Keywords: Cost-Benefit Analysis, Project Evaluation, Structural Funds, European Regional Policy
    JEL: D61 H43 R58
    Date: 2006–11
  14. By: Quiroga, Bernardo F.
    Abstract: In this paper, an hedonic pricing model is used to measure non-market attribute valuation in Social Housing Programs in Santiago de Chile. Implicit marginal prices are calculated as first stage Rosen estimates for attributes such as distance to different services, number of rooms of each type, and availability of warm water and connection to the sewage network. Distance implicit prices were calculated as the difference between coefficients of dummy variables which measured different distance levels. Results reveal non-linearity in the value of distances. Also, the number of rooms (especially bathrooms), as well as access to warm water and sewage system were highly valued.
    Keywords: hedonic modeling; social housing programs; attribute valuation.
    JEL: I38 H42 R21
    Date: 2005–12

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