Research Papers in Economics, Department of Economics, Stockholm University
Rikard Forslid and Toshihiro Okubo
Which Firms are Left in the Periphery? - Spatial Sorting of Heterogeneous Firms with Scale Economies in Transportation
Abstract: This paper introduces scale economies or density economies
in transportation in a trade and geography model with heterogeneous firms.
This relatively small change to the standard model produces a new pattern
of spatial sorting among …firms. Contrary to the existing literature, our
model produces the result that firms of intermediate productivity relocate
to the large core region, whereas high and low productivity firms remain in
the periphery. Trade liberalisation leads to a gradual relocation to the
core, with the most productive firms remaining in the periphery.
Keywords: heterogeneous …firms; transportation costs; scale economies; (follow links to similar papers)
JEL-Codes: F12; F15; (follow links to similar papers)
16 pages, April 17, 2013
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