@techreport{NBERw6459,
 title = "Agglomeration and Endogenous Capital",
 author = "Richard E. Baldwin",
 institution = "National Bureau of Economic Research",
 type = "Working Paper",
 series = "Working Paper Series",
 number = "6459",
 year = "1998",
 month = "March",
 URL = "http://www.nber.org/papers/w6459",
 abstract = {The  new' economic geography focuses on the footloose-labor and the vertically-linked-industries models.  Both are complex since they feature demand-linked and cost-linked agglomeration forces. I present a simpler model where agglomeration stems from demand-linked forces arising from endogenous capital with forward-looking agents.  The model's simplicity permits many analytic results (rare in economic geography).  Trade-cost levels that trigger catastrophic agglomeration are identified analytically, liberalization between almost equal-sized nations is shown to entail  near-catastrophic' agglomeration, and Krugman's informal stability test is shown to be equivalent to formal tests in a fully specified dynamic model.},
}