Rising Trade Costs? Agglomeration and Trade with Endogenous Transaction Costs

While transport costs have fallen, the empirical evidence also points at rising total trade costs. In a model of industry location with endogenous transaction costs, we show how and under which conditions a decline in transport costs can lead to an increase in the total cost of trade.Transaction costs, trade costs, transport costs, agglomeration, vertically linkedindustries

Buzz: Face-to-Face Contact and the Urban Economy

This paper argues that existing models of urban concentrations are incomplete unless grounded in the most fundamental aspect of proximity; face-to-face contact. Face-to-face contact has four main features; it is an efficient communication technology; it can help solve incentive problems; it can facilitate socialization and learning; and it provides psychological motivation. We discuss each of these features in turn, and develop formal economic models of two of them. Face-to-face is particularly important in environments where information is imperfect, rapidly changing, and not easily codified, key features of many creative activities.Agglomeration, clustering, urban economics, face-to-face

My neighbourhood: the 13 November Paris massacres

Most of the Paris attacks were carried out in the heart of the French capital. However, as LSE’s Michael Storper writes, the chosen areas were not those most noted for tourism, but rather included previously run-down neighbourhoods that had gradually become more gentrified without losing their charm, and which today appeal chiefly to a young crowd. As a resident of the 10th arrondissement, he kept a diary of the events during the attacks and in the days after that we reproduce below

Social capital, rules, and institutions: A cross-country investigation

Research on the institutional foundations of economic development emphasizes either rulebound systems of exchange or informal bonds between individuals and within small groups. This corresponds to a classical division in social science, between the forces of society and those of community. This cleavage largely ignores their interactions, which are likely to shape the institutions that underpin economic development in decisive ways. This paper operationalises and tests how the interaction of the forces of community (or social capital) and society (or rules) impact three types of institutions: those involved in problem solving, those that shape microeconomic efficiency and those that influence social policy, across fiftyeight countries. We find that both community and society are important determinants across all institutional domains, and are in many cases mutually reinforcing, but that different specific aspects of community and society are most relevant to different institutional domains. Instrumental associationalism, whether formal or informal, and a robust rules environment are the most important determinants of positive institutional outcomes.

Cohesion policy in the European Union: Growth, geography, institutions

Since the reform of the Structural Funds in 1989, the EU has made the principle of cohesion one of its key policies. Much of the language of European cohesion policy eschews the idea of tradeoffs between efficiency and equity, suggesting it is possible to maximise overall growth whilst also achieving continuous convergence in outcomes and productivity across Europe’s regions. Yet, given the rise in inter-regional disparities, it is unclear that cohesion policy has altered the pathway of development from what would have occurred in the absence of intervention. This paper draws on geographical economics, institutionalist social science, and endogenous growth theory, with the aim of providing a fresh look at cohesion policy. By highlighting a complex set of potential tradeoffs and inter-relations – overall growth and efficiency; inter-territorial equity; territorial democracy and governance capacities; and social equity within places – it revisits the rationale of cohesion policy, with particular attention to the geographical dynamics of economic development.

Behaviour, Preferences and Cities : Urban Theory and Urban Resurgence

The resurgence of big, old cities and their regions is real, but it is merely a part of a broader pattern of urban change in the developed countries, whose broadest tendency is urban emergence, including suburbanisation, and movements of population to certain 'Sunbelt' regions. The problem is that it is difficult to accommodate explanation of both resurgence and emergence using the main explanations in the field today. These include: theories of the knowledge or creative economy, urban amenities, diversity and tolerance, and urban beauty. In most of their common specifications, they do well for either resurgent or emergent cities, but not for both at the same time. This suggests that these ideas, interesting as they are, require much greater specification and, in some cases, overhaul, in order to offer satisfactory responses to the diversity of patterns of urban growth. By examining some of these deficiencies, we conclude that urban theory needs a better understanding of urban choice behaviours and especially the effects of bundling, the limits to preference substitutions and the relationship between past and present preferences, in order to become fully effective in explaining urban resurgence and urban emergence. When these aspects of choice and preference are better integrated into urban theory, then the 'exogenous' causes of urbanisation can be made more endogenous and, in addition, they can be applied better to both emergence and resurgence. Urban research can, by so doing, also potentially become more policy-relevant

The geographical processes behind innovation: a Europe-United States comparative analysis

The United States and European Union differ significantly in terms of their innovative capacity: the former have been able to gain and maintain world leadership in innovation and technology while the latter continues to lag. Notwithstanding the magnitude of this innovation gap and the political emphasis placed upon it on both sides of the Atlantic, very little systematic comparative analysis has been carried out on its causes. The empirical literature has emphasised the structural differences between the two continents in the quantity and quality of the major ‘inputs’ to innovation: R&D investments and human capital. The very different spatial organisation of innovative activities in the EU and the US – as suggested by a variety of contributions in the field of economic geography – could also influence innovative output. This paper analyses and compares a wide set of territorial processes that influence innovation in Europe and the United States. The higher mobility of capital, population, and knowledge in the US not only promotes the agglomeration of research activity in specific areas of the country but also enables a variety of territorial mechanisms to fully exploit local innovative activities and (informational) synergies. In the European Union, in contrast, imperfect market integration, and institutional and cultural barriers across the continent prevent innovative agents from maximising the benefits from external economies and localised interactions, but compensatory forms of geographical process may be emerging in concert with further European integration.Innovation, Research and development, Regions, Spillovers, Agglomeration, Systems of innovation, European Union, United States

The geographical processes behind innovation: A Europe-United States comparative analysis

The United States and European Union differ significantly in terms of their innovative capacity: the former have been able to gain and maintain world leadership in innovation and technology while the latter continues to lag. Notwithstanding the magnitude of this innovation gap and the political emphasis placed upon it on both sides of the Atlantic, very little systematic comparative analysis has been carried out on its causes. The empirical literature has emphasised the structural differences between the two continents in the quantity and quality of the major 'inputs' to innovation: R&D investments and human capital. The very different spatial organisation of innovative activities in the EU and the US – as suggested by a variety of contributions in the field of economic geography – could also influence innovative output. This paper analyses and compares a wide set of territorial processes that influence innovation in Europe and the United States. The higher mobility of capital, population, and knowledge in the US not only promotes the agglomeration of research activity in specific areas of the country but also enables a variety of territorial mechanisms to fully exploit local innovative activities and (informational) synergies. In the European Union, in contrast, imperfect market integration, and institutional and cultural barriers across the continent prevent innovative agents from maximising the benefits from external economies and localised interactions, but compensatory forms of geographical process may be emerging in concert with further European integration.

The digital skin of cities: urban theory and research in the age of the sensored and metered city, ubiquitous computing and big data

A ‘digital skin’ of the city is coming into being. This skin consists of a sensored and metered urban environment. The urban world is becoming a platform for generating data on the workings of human society, human interactions with the physical environment and manifold economic, political and social processes. The advent of the digital skin opens up many questions for urban theory and research, and many new issues for public and urban policy, which are explored in this article

Capital y localización industrial

La théorie traditionnelle de la localisation industrielle s'est fondée sur des variantes de l'économie néoclassique, que ce soit l'équilibre partiel et la minimisation des coûts (théorie weberienne) ou l'équilibre général et la maximisation du revenu (théorie de la localisation centrale). Cette tradition a perdu la faveur de nombreux géographes et de ce fait des géographes de l'industrie ont poussé en avant la recherche empirique en mêmê temps qu'ils cherchaient des sources nouvelles d'orientation théorique. On a bâti des modèles à propos de sujects tels que le cycle productif, la diffusion de l'innovation, les déséquilibres régionaux de la croissance, la prise de décisions marginale, la structure organisationnelle, réponses à l'environnement et enchainements. Ces efforts échouent pourtant sur un certain nombre de points: principalement, la définition érronée de l'économie comme un systeme industriel, l'emphase sur le changement technique comme le plus important procbs l'oeuvre, une conception étroite de la structure économique en termes d'enchainements et le rejet du social et du contradictoire vers l'environnement extérieur du systeme.Traditional industrial location theory has been based on variants of neoclassical economics, wether partial equilibrium and cost minimizing (weberian) or general equilibrium and revenue maximizing (central piace theory). This tradition has fallen into disfavour with a wide range of geographers and as a result industrial geographers have continued to push ahead with empirical research into industrial location while searching for theoretical guidance from new quarters. Models have been built on such things as the product cycle, innovation diffusion, regional imbalancd growth, marginal decision-making, organizational structure, environment-response and linkages. This effort falls short on a number of counts, however: principally the misspecification of the economy as an industrial system, focus on technical change as the main process at work, limited conception of economic structure in terms of linkages, and relegation of the social and the contradictory to the external environment of the system.La teoria tradicional de la localització industrial s'ha basat en variants de l'economia neoclissica, ja sigui a I'equilibri parcial i a la minimització dels costs (teoria weberiana) o a l'equilibri general i a la maximització dels ingressos (teoria del lloc central). Aquesta tradició ha patit un cert descrèdit en amplis sectors de geògrafs, per la qual cosa els geògrafs de la indústria han continuat impulsant la investigació empírica sobre la localització industrial mentre buscaven orientacions teòriques des de noves bases. S'han construit models sobre, per exemple, el cicle de producció, la difusió de les innovacions, els desequilibris regionals del creixement. la presa de decisions marginal, l'estructura organitzativa, la resposta a I'entorn i les connexions. Tanmateix, aquest es for resulta insatisfactori des de diversos punts de vista, principalment a la caracterització equivocada de I'economia com un sistema industrial, a l'èmfasi sobre el canvi tecnològic com a principal procés en acció, a la limitada concepció de l'estructura económica en termes de connexions i al fet de relegar el social i el contradictori a l'entorn exterior del sistema