TY  - JOUR
AU  - Baldwin,Richard E.
TI  - Agglomeration and Endogenous Capital
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6459
PY  - 1998
Y2  - March 1998
UR  - http://www.nber.org/papers/w6459
L1  - http://www.nber.org/papers/w6459.pdf
N1  - Author contact info:
Richard Baldwin
Cigale 2
1010 Lausanne
SWITZERLAND
Tel: 41-22-908-5900
E-Mail: rbaldwin@cepr.org
AB  - 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.
ER  -