Agglomeration in purely neoclassical and symmetric economies

Berliant, Marcus and Watanabe, Axel (2024): Agglomeration in purely neoclassical and symmetric economies.

Abstract

This article demonstrates the emergence of agglomeration unaccompanied by conventional explanatory factors such as scale economies, externalities or comparative advantages. We construct a general equilibrium model with four commodities, four types of households and linear production over two regions. A pair of types behave disassortatively when their endowments complement each other. The resultant distribution involves an intense agglomeration consisting of varied types. In contrast, they behave assortatively when they are in direct competition for endowments that cannot be transported or produced. This results in a moderate agglomeration with a disproportionate presence of selected types. Complementarity and endowment portability are the primary causative factors behind consumer behavior and subsequent equilibrium agglomeration.

• Item Type: MPRA Paper
• Language: English
• Keywords: Agglomeration; General equilibrium; Spatial sorting
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies

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