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Discussion Paper Details

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Title: Transport Costs, Intermediate Goods and Localized Growth

Author(s): Uwe Walz

Publication Date: November 1995

Keyword(s): Economic Geography, Factor Mobility and Regional Growth

Programme Area(s): International Trade and Regional Economics

Abstract: This paper presents a dynamic, two-region general equilibrium model in which inter-regional production and trade patterns are endogenously determined. Localized growth stems from geographical concentration of an industrial sector exhibiting permanent productivity increases. Geographical concentration is due to the interaction of the size of local markets and local competition in the differentiated input industry. Regional factor endowment with an immobile factor is decisive for long-run specialization, trade and growth patterns between regions if large endowment differences prevail. With equally-sized regions, multiple equilibria exist. Furthermore, the paper finds that integration might lead to increasing regional concentration of production and growth.

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Bibliographic Reference

Walz, U. 1995. 'Transport Costs, Intermediate Goods and Localized Growth'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=1267