nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒02‒01
twelve papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Human Capital in Cities and Suburbs By Stolarick, Kevin; Mellander, Charlotta; Florida, Richard
  2. A Core-Periphery Model of Urban Economic Growth: Empirical Evidence using Chinese City-Level Data, 1990-2006 By Zhao Chen; Ming Lu; Zheng Xu
  3. Second-Best Cost-Benefit Analysis in Monopolistic Competition Models of Urban Agglomeration By Yoshitsugu Kanemoto
  4. From Russia with Love: The Impact of Relocated Firms on Incumbent Surv ival By Falck, Oliver; Guenther, Christina; Heblich, Stephan; Kerr, William R.
  5. Pattern and determinants of public budget allocation to border regions in Iran By Hossein Mirshojaeian Hosseini; Shinji Kaneko
  6. Commercial Revitalization in Low-Income Urban Communities: General Tax Incentives vs. Direct Incentives to Developers By Zhou, Li
  7. Agglomeration Bonus in Local Networks: A laboratory examination of spatial coordination failure By Banerjee, Simanti; Kwasnica, Anthony M.; Shortle, James S.
  8. The Inventive, the Educated, and the Creative: How Do They Affect Metropolitan Productivity? By Lobo, José; Mellander, Charlotta; Stolarick, Kevin; Strumsky, Deborah
  9. Product innovation and logistic optimization in a novel urban-type model By Stefano Colombo; Luigi Filippini
  10. Spatial price homogeneity as a mechanism to reduce the threat of regulatory intervention in locally monopolistic sectors By Magnus Söderberg; Makoto Tanaka
  11. Spatial Spillover of Governance and Institutional Quality: A Spatial Econometric Approach By Hossein Mirshojaeian Hosseini; Shinji Kaneko

  1. By: Stolarick, Kevin (University of Toronto); Mellander, Charlotta (Jönköping International Business School); Florida, Richard (University of Toronto)
    Abstract: Research on human capital generally focuses on the regional level, and neglects the relative effects of its distribution between center cities and surrounding suburbs. This research examines the effects of this intra-metropolitan distribution on economic performance. The findings indicate that this distribution matters significantly to US regional performance. Suburban human capital matters more than center city human capital. However, this varies by regional size. Suburban human capital has the biggest effect on regional economic performance in smaller and medium size metros. Center city human capital has a relatively larger effect on economic performance in regions with over one million people.
    Keywords: Human Capital; Density; Intra-metropolitan distribution; Income; Housing prices
    JEL: J24 O30 R10 R20
    Date: 2012–01–20
  2. By: Zhao Chen; Ming Lu; Zheng Xu
    Abstract: The core-periphery (CP) model of urban systems lacks evidence from real data for the nonlinear relationship between distance to core and market potential. China remains in the process of industrialization and globalization, thereby making it suitable for practical application of the CP model of urban systems. Using Chinese city-level data from 1990 to 2006, this paper estimates the impact of spatial interactions in China's urban system on urban economic growth, and fills the gap between CP model of urban systems and reality. Our results show that a proximity to major ports and international markets is essential for urban growth. Moreover, the geography-growth relationship follows the U-shaped nonlinear pattern implied by the CP model in a monocentric urban system. We also find "border effect" in the administrative boundaries between Chinese provinces. As a centrifugal force, this prevents the absorption of urban economic activities by large cities in other provinces.
    Keywords: Core-Periphery Model, Urban Systems, Trade Policy, China
    Date: 2011–10
  3. By: Yoshitsugu Kanemoto (National Graduate Institute for Policy Studies)
    Abstract: Many sources of urban agglomeration involve departures from the first-best world. By modeling the microstructure of agglomeration economies, we derive second-best benefit evaluation formulae for urban transportation improvements. Previous work has investigated the same problem, but without explicitly modeling the sources of agglomeration economies. Accordingly, our analysis examines whether earlier results remain valid when monopolistic competition with differentiated products provides the microfoundation of the agglomeration economies. By explicitly introducing the rural sector and multiple cities, we also show that the agglomeration benefits depend on where the new workers are from.
    Date: 2012–01
  4. By: Falck, Oliver; Guenther, Christina; Heblich, Stephan; Kerr, William R.
    Abstract: We identify the impact of local firm concentration on incumbent performance with a quasi natural experiment. When Germany was divided after World War II, many firms in the machine tool industry fled the Soviet occupied zone to prevent expropriation. We show that the regional location decisions of these firms upon moving to western Germany were driven by non-economic factors and heuristics rather than existing industrial conditions. Relocating firms increased the likelihood of incumbent failure in destination regions, a pattern that differs sharply from new entrants. We further provide evidence that these effects are due to increased competition for local resourc es.
    Keywords: Germany; labor; firm dynamics; competition; Agglomeration
    Date: 2011–07
  5. By: Hossein Mirshojaeian Hosseini (Graduate School for International Development and Cooperation, Hiroshima University); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: The historical centripetal behavior of the government has made the border regions as periphery of the central areas in Iran. The regional disparities in Iran root in the economic structure of the country. Iran is one of the main exporters of petroleum and natural gas. The huge revenues of natural resources have reduced the dependence of central government to domestic economic activities and made Iran one of the closest economies in the world. This paper studies the pattern and determinants of public budget allocation to the border regions in Iran over the period 1989?2007. The results show that different characteristics of the border provinces such as geographical position, economic conditions, type of borders, distances from the capital, and natural resource richness influence the level and trend of their realized budgets.
    Keywords: Border regions, Provincial budgets, Iran, Panel data
    JEL: C33 O53 R51 R58
    Date: 2012–01
  6. By: Zhou, Li (University of Alberta, Department of Economics)
    Abstract: This paper proposes a commercial development model, based on Fujitas (1988) monopolistic com- petition model of spatial agglomeration, to examine storesdecisions to enter urban communities. The model focuses on commercial developers and large stores, and identi fies a potential holdup problem in the commercial development market arising because developers incur costs before negotiating with anchor tenants over pro fit sharing; the holdup problem is more likely to occur in low-income communities where the pro fitability of commercial projects is small. The model predicts that direct incentives to developers are preferred to general tax incentives for addressing this market failure.
    Keywords: urban redevelopment programs; economic agglomeration; holdup problem
    JEL: H50 H76 R58
    Date: 2012–01–01
  7. By: Banerjee, Simanti; Kwasnica, Anthony M.; Shortle, James S.
    Abstract: The Agglomeration Bonus (AB) - a subsidy mechanism can incentivize neighboring landowners to spatially coordinate their land use decisions for effective provision of ecosystem services such as biodiversity protection. In this paper we explore individual AB performance on a local network in a laboratory setting. In our experiments, we vary the local network size while keeping the number of neighbors for each player same. Results suggest better AB performance and greater spatial coordination in smaller groups relative to bigger ones. In bigger groups however we observe localized areas of coordinated land use choices which indicate partial AB effectiveness.
    Keywords: experiments; local networks; coordination failure; Agglomeration Bonus
    Date: 2011–11
  8. By: Lobo, José (Arizona State University); Mellander, Charlotta (Jönköping International Business School); Stolarick, Kevin (University of Toronto); Strumsky, Deborah (University of North Carolina-Charlotte)
    Abstract: A longstanding research tradition assumes that endogenous technological development increases regional productivity. It has been assumed that measures of regional patenting activity or human capital are an adequate way to capture the endogenous creation of new ideas that result in productivity improvements. This process has been conceived as occurring in two stages. First, an invention or innovation is generated, and then it is developed and commercialized to create benefits for the individual or firm owning the idea. Typically these steps are combined into a single model of the “invention in/productivity out” variety. Using data on Gross Metropolitan Product per worker and on inventors, educational attainment, and creative workers (together with other important socio-economic controls), we unpack the model back to the two-step process and use a SEM modeling framework to investigate the relationships among inventive activity and potential inventors, regional technology levels, and regional productivity outcomes. Our results show almost no significant direct relationship between invention and productivity, except through technology. Clearly, the simplification of the “invention in/productivity out” model does not hold, which supports other work that questions the use of patents and patenting related measures as meaningful innovation inputs to processes that generate regional productivity and productivity gains. We also find that the most effective measure of regional inventive capacity, in terms of its effect on technology, productivity, and productivity growth is the share of the workforce engaged in creative activities.
    Keywords: Innovation; Productivity; Regional Technology; Patents; Human Capital; Creative Class
    JEL: C31 O10 O31 O47 R11 Z10
    Date: 2012–01–20
  9. By: Stefano Colombo (DISCE, Università Cattolica); Luigi Filippini (DISCE, Università Cattolica)
    Abstract: We consider the strategic choice between product innovation and logistic optimization in a novel urban framework where consumers are distributed across the city and have different incomes depending on their location in the town. Depending on the relative efficiency of the product innovation process and the logistic innovation process as well as on the degree of spatial symmetry between the firms, both symmetric and asymmetric business strategy equilibria may arise, as well as both unique and multiple business strategy equilibria.
    Keywords: Product innovation; logistic optimization; linear town
    JEL: L13 R12 R41
    Date: 2012–01
  10. By: Magnus Söderberg (CERNA - Centre d'économie industrielle - Mines ParisTech); Makoto Tanaka (GRIPS - National Graduate Institute for Policy Studies - National Graduate Institute for Policy Studies)
    Abstract: We claim that a reason for why unregulated investor-owned local monopolies do not always charge the monopoly price is that they are threatened by customer complaints that may lead to retaliations from local elected officials. When investor-owned monopolies are exposed to this threat they will mimic the price(s) of their neighbour(s); the stronger the threat, the higher the spatial price correlation. The threat increases when elected officials have pro-consumer preferences and neighbours are geographically close. The empirical analysis, based on a complete cross-sectional data set from the Swedish district heating sector in 2007, confirms the theoretical predictions.
    Date: 2012
  11. By: Hossein Mirshojaeian Hosseini (Graduate School for International Development and Cooperation, Hiroshima University); Shinji Kaneko (Graduate School for International Development and Cooperation, Hiroshima University)
    Abstract: The failure of Washington consensus increased the attention of researchers and policymakers on improving institutional quality of countries. Different empirical studies have been done to find determinants of institutional quality especially at global scales. This paper represents a complementary approach on previous efforts by developing spatial spillover of governance as a determinant of institutional quality. In fact, this paper attempts to answer to the question: how much can the institutional quality of neighboring countries explain good governance of a country and what is the share of this variable among the other determinants? To answer these questions, spatial econometric approach is adopted. Paper reveals that spatial governance spillover can explain about 20% of governance quality of countries and consequently is one of the serous determinants of institutional quality when the concept of contiguity gets wider than land borders.
    Keywords: Institutional quality; Governance spillover; Spatial econometrics
    JEL: C31 C52 H11
    Date: 2012–01
  12. By: Yuki Tanaka (National Graduate Institute for Policy Studies); Alistair Munro (National Graduate Institute for Policy Studies)
    Abstract: Experiments measuring risk and time preferences in developing countries have tended to have relatively small samples and geographically concentrated sampling. This large-scale field experiment uses a Holt-Laury mechanism to elicit the preferences of 1289 randomly selected subjects from 94 villages covering six out of seven agro-climatic zones across rural Uganda. As in previous studies we find evidence of risk aversion and loss aversion amongst most subjects. In addition we find significant heterogeneity in risk attitudes across agro-climatic zones. Especially, the farmers in the agro-climatically least favourable zone, the uni-modal rainfall zone, are the most risk averse, loss averse and impatient. We also find significant relationships between risk attitudes and village level predictors such as the distance to town and the road conditions. After controlling for the village level factors, we find that the level of schooling still positively correlates with the individual’s level of loss tolerance and patience. The main results are not altered by allowing for probability weighting in subjects’ choices. Overall the results provide clear evidence that within one country there may be significant regional variations in risk and time attitudes. We conjecture that the agro-climatic conditions that affect farmers’ livelihoods may also affect their risk and time preferences and village level development in infrastructure could improve the household perception of investment related policies.
    Date: 2012–01

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