Agglomeration Effects and the Competition for Firms

CIRPEE Working Paper No. 03-24

28 Pages Posted: 18 Aug 2003

See all articles by Robin Boadway

Robin Boadway

Queen's University; CESifo (Center for Economic Studies and Ifo Institute); Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Katherine Cuff

McMaster University - Department of Economics

Nicolas Marceau

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Date Written: April 2003

Abstract

A two-region economy consists of a given but different number of immobile workers in each region, and a given number of mobile firms. Firms create jobs where they locate, but there is frictional unemployment. Two sorts of agglomeration effects arise: those from economies of scale in matching, and those from production economies external to the firm. Regions may either be part of a unitary state in which case all regional policies are decided by the central government, or they may be part of a federal state in which case some policies are determined by the regional governments. We characterize the resource allocations in both a unitary and a federal state, and identify the set of instruments that are required to replicate the social optimum in each state.

Keywords: Agglomeration, Inter-Jurisdictional Competition, Unemployment

JEL Classification: H2, H7, J6, R3

Suggested Citation

Boadway, Robin and Cuff, Katherine and Marceau, Nicolas, Agglomeration Effects and the Competition for Firms (April 2003). CIRPEE Working Paper No. 03-24, Available at SSRN: https://ssrn.com/abstract=413100 or http://dx.doi.org/10.2139/ssrn.413100

Robin Boadway

Queen's University ( email )

99 University Avenue
Kingston K7L 3N6, Ontario
Canada
613-533-2266 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://qed.econ.queensu.ca/pub/faculty/boadway/

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Ste-Foy, Quebec G1K 7P4
Canada

Katherine Cuff (Contact Author)

McMaster University - Department of Economics ( email )

Hamilton, Ontario L8S 4M4
Canada
905-525-9140 ext. 23827 (Phone)

HOME PAGE: http://socserv.socsci.mcmaster.ca/cuffk/

Nicolas Marceau

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE) ( email )

Ste-Foy, Quebec G1K 7P4
Canada