DP13381 Trade Liberalization and the Agglomeration of Heterogeneous Entrepreneurs

Author(s): Rikard Forslid, Toshihiro Okubo
Publication Date: December 2018
Date Revised: December 2018
Keyword(s): agglomeration, Heterogeneous Firms, trade liberalization
JEL(s): F12, F15, R12
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13381

This paper introduces spatial sorting of heterogeneous entrepreneurs (firms) in the 'footloose entrepreneur' trade and geography model. The model generates agglomeration from a uniform space contrary to the 'footloose capital' model. The model also generates spatial sorting in reverse productivity order with the least productive entrepreneur being the first to relocate.