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Agglomeration in a global economy: a survey

By Gianmarco I. P. Ottaviano and Diego Puga

Abstract

This review of recent contributions reveals common conclusions about the effects of integration on location. For high trade costs, the need to supply markets locally encourages firms to spread across different regions. Integration weakens the incentives for self-sufficiency and for intermediate values of trade costs pecuniary externalities induce firms and workers to cluster together, turning location into a self-reinforcing process. However, agglomeration raises the price of immobile local factors and goods, so far low transport costs firms may spread to regions where those prices are lower

Topics: HF Commerce
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 1997
OAI identifier: oai:eprints.lse.ac.uk:20324
Provided by: LSE Research Online
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