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Technical change and agglomeration

By Carl Gaigné and Stéphane Riou


Although economic historians consider technical change to be a significant factor explaining the evolution of the spatial organization of an economy, economic geography still fails to address this important issue. By developing a simple two-region general equilibrium model under monopolistic competition, we show that agglomeration is triggered by technological progress shifting production towards more skill intensive techniques.Skill-biased change economic geography

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