nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒12‒19
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Explaining the size distribution of cities: x-treme economies By Berliant, Marcus; Watanabe, Hiroki
  2. Do we really need regional innovation agencies? Some insights from the experience of an Italian region By Annamaria Fiore; Maria Jennifer Grisorio; Francesco Prota
  4. Skill composition and regional entrepreneurship: a comparative study between Germany and Portugal By Mendonça, Joana; Grimpe, Christoph
  5. Sequential Spatial Competition in Vertically Related industries with Different Product Varieties By Beladi, Hamid; Chakrabarti, Avik; Marjit, Sugata
  6. Cities, Climate Change and Multilevel Governance By Jan Corfee-Morlot; Lamia Kamal-Chaoui; Michael G. Donovan; Ian Cochran; Alexis Robert; Pierre-Jonathan Teasdale
  7. Urbanisation and Migration: An Analysis of Trends, Patterns and Policies in Asia By Kundu, Amitabh
  8. Dynamic macroeconomic effects of public capital: evidence from regional Italian data By Valter Di Giacinto; Giacinto Micucci; Pasqualino Montanaro
  9. Entrepreneurship, Innovation and Spatial Disparities: Divisions and Changes of Self-employment and Firms By Bögenhold, Dieter; Fachinger, Uwe
  10. Regional Economic Modelling for Indonesia: Implementation of the IRSA-INDONESIA5 By Budy P Resosudarmo; Arief A Yusuf; Djoni Hartono; Ditya A Nurdianto
  11. Lot Size, Zoning, and Household Preferences: Impediments to Smart Growth? By Kopits, Elizabeth; McConnell, Virginia; Miles, Daniel
  12. Relationship-Specificity, Spatial Clustering and Production to Order Choice By L. Casaburi; G. A. Minerva

  1. By: Berliant, Marcus; Watanabe, Hiroki
    Abstract: We criticize the theories used to explain the size distribution of cities. They take an empirical fact and work backward to obtain assumptions on primitives. The induced theoretical assumptions on consumer behavior, particularly about their inability to insure against the city-level productivity shocks in the model, are untenable. With either self insurance or insurance markets, and either an arbitrarily small cost of moving or the assumption that consumers do not perfectly observe the shocks to firms' technologies, the agents will never move. Even without these frictions, our analysis yields another equilibrium with insurance where consumers never move. Thus, insurance is a substitute for movement. We propose an alternative class of models, involving extreme risk against which consumers will not insure. Instead, they will move, generating a Fréchet distribution of city sizes that is empirically competitive with other models.
    Keywords: Zipf's Law; Gibrat's Law; Size Distribution of Cities; Extreme Value Theory
    JEL: R12
    Date: 2009–12–08
  2. By: Annamaria Fiore (Agenzia Regionale per la Tecnologia e l’Innovazione - ARTI); Maria Jennifer Grisorio (Agenzia Regionale per la Tecnologia e l’Innovazione - ARTI); Francesco Prota (Department of Economics & Mathematics, University of Bari)
    Abstract: Increasing globalization, if properly exploited, can provide interesting opportunities for regional economies. Nevertheless, when they are not managed with a far-sighted approach, regions, and particularly those at an intermediate level of development, can lose their comparative advantages compared to regions of developing countries. Innovation is the main instrument for improving and ensuring competitiveness to enterprises and growth opportunities to local economies. The aim of this paper is to discuss the importance of public policies in reinforcing regional innovation systems, and the role of regional innovation agencies. With this in mind, we describe the policies implemented by the Regional Agency for Technology and Innovation (ARTI) of Apulia, a region in Southern Italy. We also provide the first assessment of ARTI’s activities and provide some suggestions on how to improve regional R&D policies.
    Keywords: public policy, innovation, regional innovation system, regional competitiveness
    JEL: O18 O38 R58
    Date: 2009–11
  3. By: Massimo Battaglia (Sant’Anna School of Advanced Studies - MAIN Lab, Pisa, Italy); Fabio Iraldo (Sant’Anna School of Advanced Studies, Pisa, Italy)
    Abstract: It is widely known that one of the most important economic and social facts concerning the European Union consists in the mismatch among its regions in terms of unemployment rates. The purpose of this paper is that of analysing the role of geographical mobility of production inputs (in particular of labour) in the automatic adjustment mechanisms. In particular, the paper aims at examining and measuring the efficiency of Italian policies for labour market carried out in the last 10 years, in terms of reduction of the regional disparities in comparison with the whole European distribution of unemployment. We question if these policies have been successful or the territorial dimension has still a role on the unemployment problem in Italy. We answer to this question by calculating the Theil Index (Walsh and O’Kelly, 1979) using data from 1996 to 2006 on unemployment and participation from Eurostat on NUTS 2 level, comparing Italian data with other EU countries ones. Our results show that Italy has still a prominent role in the geographical disparities among regions and that its contribution to the geographical concentration of unemployment is still high (especially if we consider female and youth unemployment).
    Date: 2009–06–01
  4. By: Mendonça, Joana; Grimpe, Christoph
    Abstract: The question whether agglomeration externalities arise either from specialization or diversification of economic activity has since long been a major topic in the analysis of factors determining economic growth. In this paper we analyze whether a more specialized or a more diverse skill composition of labor in regions affects the level of new firm entries in general as well as in technology- and knowledge-intensive subsectors. We compare Germany and Portugal which exhibit, though EU member states, different institutional infrastructures for entrepreneurship. Based on a harmonized dataset, our results indicate that the skill composition has different effects on firm entry in the two countries. More specifically, for Portugal the specialization of skills has a positive effect on the level on new firm entry in all sectors. In contrast to this, our results for Germany reveal exactly the opposite effect. These results suggest that both specialization and diversity theories hold, and that the effect thus may depend on other more local and regional factors. --
    Keywords: Entrepreneurship,skill composition,regional analysis,comparative study
    JEL: J24 L26 O57 R11
    Date: 2009
  5. By: Beladi, Hamid; Chakrabarti, Avik; Marjit, Sugata
    Abstract: We demonstrate the sensitivity of the location of downstream firms, engaged in sequential spatial competition, to the vertical structure of an industry where no downstream firm can produce all varieties demanded.
    Keywords: Product-differentiation; Price-discrimination; Spatial competition; Firm-location; Merger.
    JEL: L13 L42 R32 D43
    Date: 2009
  6. By: Jan Corfee-Morlot; Lamia Kamal-Chaoui; Michael G. Donovan; Ian Cochran; Alexis Robert; Pierre-Jonathan Teasdale
    Abstract: Cities represent a challenge and an opportunity for climate change policy. As the hubs of economic activity, cities generate the bulk of GHG emissions and are thus important to mitigation strategies. Urban planning will shape future trends and the concentration of population, socio-economic activity, poverty and infrastructure in urban areas translates into particular vulnerability to increased climate hazards. City governments and urban stakeholders will therefore be essential in the design and delivery of cost-effective adaptation policies. Further, by empowering local governments, national policies could leverage existing local experiments, accelerate policy responses, foster resource mobilization and engage local stakeholders. This paper presents a framework for multilevel governance, showing that advancing governance of climate change across all levels of government and relevant stakeholders is crucial to avoid policy gaps between local action plans and national policy frameworks (vertical integration) and to encourage cross-scale learning between relevant departments or institutions in local and regional governments (horizontal dimension). Vertical and horizontal integration allows two-way benefits: locally-led or bottom-up where local initiatives influence national action and nationally-led or top-down where enabling frameworks empower local players. The most promising frameworks combine the two into hybrid models of policy dialogue where the lessons learnt are used to modify and fine-tune enabling frameworks and disseminated horizontally, achieving more efficient local implementation of climate strategies.
    Keywords: climate change, global warming, government policy, regional economics, Regional, Urban and rural Analyses
    JEL: Q51 Q54 Q56 Q58 R00
    Date: 2009–12–02
  7. By: Kundu, Amitabh
    Abstract: The present paper overviews urbanisation and migration process in Asian countries at macro level since 1950s, including the projections made till 2030. It questions the thesis of southward movement of urbanisation and that of urban explosion in Asia. Increased unaffordability of urban space and basic amenities, negative policy perspective towards migration and various rural development pogrammes designed to discourage migration are responsible for this exclusionary urban growth and a distinct decline in urban rural growth differential, with the major exception of China. The changing structure of urban population across different size categories reveals a shift of growth dynamics from large to second order cities and stagnation of small towns. The pace of urbanization has been modest to high in select countries in Asia, not because of their level of economic growth but its composition and labour intensity of rapidly growing informal sectors. Several countries have launched programmes for improving governance and infrastructural facilities in a few large cities, attracting private investors from within as well as outside the country. These have pushed out squatter settlements, informal sector businesses along with a large number of pollutant industries to a few pockets and peripheries of the cities. The income level and quality of basic amenities in these cities, as a result, have gone up but that has been associated with increased intra-city disparity and creation of degenerated periphery. Nonetheless, there is no strong evidence that urbanization is associated with destabilization of agrarian economy, poverty and immiserisation, despite the measures of globalization resulting in regional imbalances. The overview of the trend and pattern suggests that the pace of urbanization would be reasonably high but much below the level projected by UNPD in the coming decades.
    Keywords: urbanisation; migration; exclusion; periphery; informalisation; small towns; economic concentration; urban rural growth differential; Asia; China and India
    JEL: O15 P25 N95
    Date: 2009–06–01
  8. By: Valter Di Giacinto (Bank of Italy); Giacinto Micucci (Bank of Italy); Pasqualino Montanaro (Bank of Italy JEL classification: C32, H54, R53)
    Abstract: This paper assesses the effects of public capital in Italy on the main macroeconomic aggregates: GDP, private capital and labour. A cointegrated vector autoregressive (VAR) model, in line with recent advancements in the field, allows us to take into account the complex nexus of direct and indirect links between the variables. We find a persistent increase in GDP in response to a positive shock to public capital; this result is mainly attributable to a strong stimulus exerted by public infrastructures on private capital (crowding in). The positive effects of public capital are quite pervasive across Italy, albeit to differing extents. In particular, a higher elasticity of GDP to public capital is estimated for the South, whereas marginal productivity turns out to be higher in the Centre-North. This suggests that public capital has a lower economic return in the South, bearing out the existence of a potential conflict between equity and efficiency goals. Finally, we indirectly document the existence of positive spillover effects at the regional level, allowing individual regions to benefit from the endowment of public capital in the rest of the country.
    Keywords: public capital, crowding in effects, Italian regional divides, VAR models
    Date: 2009–11
  9. By: Bögenhold, Dieter; Fachinger, Uwe
    Abstract: Topic of the paper is the development of professional self-employment during the last decades in Germany. The discussion is divided into a theoretical and an empirical section. The first theoretical part deals with the term entrepreneurship and asks for its overlapping with categories of self-employment and of innovation. Although these terms cover only partially the same meanings, political discourse often equals the slogan to foster entrepreneurship and innovation with an increase of self-employment. The second section of the paper is concerned with concrete investigation of development patterns of occupational self-employment since the beginning of the 1990th until 2006 based upon microcensus data for Germany. First of all, the overall increase of self-employment becomes visible but the principle lines hide further fundamental structural changes. A majority of those „new“ self-employed people belongs into the category of solo-self-employment and micro firms without further employees. An equation of entrepreneurship with innovation activities and in-creasing self-employment ratios falls too short and is problematic with respect to discussion on economic policy needs to increase growth. Differentiation for regions, economic sectors and gender offers a picture which is contradictory and which does not correspond with some causal explanations as found conventionally.
    Keywords: self-employment; entrepreneurship; professionals; development; Germany
    JEL: J44 J23 R23
    Date: 2009–11–29
  10. By: Budy P Resosudarmo; Arief A Yusuf; Djoni Hartono; Ditya A Nurdianto
    Abstract: Ten years after the implementation of a major decentralization policy, issues of inter-regional disparities in income and rates of natural resource extraction still figure prominently in Indonesian economic policy debate. There is great interest in identifying the macro policies that would reduce regional income disparity and better control the rate of natural extraction, while maintaining reasonable national economic growth. In this paper we develop an inter-regional computable general equilibrium model (IRSA-INDONESIA5) as an appropriate tools for analysis these issues and employ it to examine economy-wide impacts of various policies under consideration.
    Keywords: Computable General Equilibrium, Development Planning and Policy, Environmental Economics.
    JEL: C68 O20 Q50
    Date: 2009
  11. By: Kopits, Elizabeth; McConnell, Virginia (Resources for the Future); Miles, Daniel
    Abstract: The paper explores a number of issues related to lot size and urban density. First, trends in single-family residential lot size over the past 35 years are examined in eight counties in the state of Maryland. We find that there was a trend toward larger lot sizes in many suburban counties in the mid to late 1990s, and that there has been a general flattening of the density gradient in urban areas over the last few decades. We then examine the extent to which lot size is being constrained by regulation by comparing actual subdivision density to the allowable density under zoning rules. This analysis is done for three counties with different degrees of suburbanization. We find that only in the areas with the very large lot zoning does zoning seem to be constraining actual lots size. There is a good deal of excess capacity in the density that could be built, especially in the more densely zoned areas. Finally, recognizing that households have preferences for lot size and other housing characteristics, we provide some evidence about the strength of household preferences over lot size and their willingness to trade off lot size for other characteristics.
    Keywords: land use, urban sprawl, density, lot size
    JEL: Q24 Q28 R14
    Date: 2009–04–09
  12. By: L. Casaburi; G. A. Minerva
    Abstract: We study the determinants of the firm-level choice to produce following an order placed by a downstream firm (production to order) or to produce in advance. We rationalize this choice through a simple theoretical model and apply it to a firm-level empirical analysis. Relying on a large dataset of Italian manufacturing firms, we show that two main variables affect this choice: the extent of spatial clustering of the industry, and the degree of product complexity and relationship-specificity of the goods that are traded. The sign of the impact of clustering on the choice of producing to order crucially depends on product complexity. If product complexity is high, production to order prevails when firms are clustered together. On the contrary, clustering is associated to production in advance for sectors where goods are standardized.
    JEL: D23 F10 L14 R30 R34
    Date: 2009–11

This nep-geo issue is ©2009 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.