Taste heterogeneity, labor mobility and economic geography - A critical reconsideration and correction

Arbeitspapier

This article reconsiders the linear new economic geography model under heterogeneous agents developed by Tabuchi and Thisse (2002) by applying an analytical technique introduced by Ludema and Wooton (1999). Two problematic aspects are identified first, the bifurcation pattern for countries which differ in amenities is incorrect. I show that the degree of agglomeration is highest when trade costs are high. Besides this minor problem, the second critical issue concerns the welfare analysis. It is shown in this note that this model exhibits a latent tendency for overagglomeration when trade costs are high and underagglomeration when trade costs are low, bringing it in line with other welfare analyses of new economic geography models.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: BGPE Discussion Paper ; No. 29

Classification and Topics

• Classification: Wirtschaft ; General Equilibrium and Welfare Economic Analysis of Regional Economies ; Economic Development: Human Resources; Human Development; Income Distribution; Migration ; Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
• Subject: Agglomeration ; Migration ; Welfare ; New economic geography

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Russek, Stephan
• Event: Veröffentlichung
• (who): Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)
• (where): Nürnberg
• (when): 2007

Further information

• Handle: http://hdl.handle.net/10419/73359
• Last update: 10.03.2025, 11:44 AM CET