Trade Costs, Regional Inequality, and the Home Market Effect
We develop an economic geography framework with positive trade costs in both manufacturing and traditional sectors, mobile skilled workers, and unequal shares of unskilled labour in regions. We show that partial agglomeration always features the home market effect (HME) regardless of whether regions trade only the manufacturing good or both. Moreover, spatial factor mobility is significant for the HME to arise while intersectoral mobility does not play a crucial role. Furthermore, a decrease in the traditional sector trade costs makes the HME weaker, and increases the likelihood of full agglomeration in the larger region. Finally, we show that a small departure from Cobb-Douglas upper-tier utility towards gross substitutability of manufacturing and traditional goods reinforces the HME while the opposite holds for gross complementarity of goods.
We propose a general equilibrium model to study the spatial inequality of consumers and firms within a city. Our mechanics rely on Dixit and Stiglitz monopolistic competition framework. The firms and consumers are continuously distributed across a two-dimensional space, there are iceberg-type costs both for goods shipping and workers commuting (hence firms have variable marginal costs based on their location). Our main interest is in the equilibrium spatial distribution of wealth. We construct a model that is both tractable and general enough to stand the test of real city empirics. We provide some theoretical statements, but mostly the results of numerical simulations with the real Moscow data.
Standard measures of competitive toughness fail to capture the fact that, as consumers optimize intertemporally, firms operating today compete with (yet non-existent) businesses which will be started tomorrow. We develop a two-tier CES model of dynamic monopolistic competition in which the impact of product differentiation on the market outcome depends crucially on the elasticity of intertemporal substitution (EIS). The degree of product differentiation per se fails to serve as a meaningful indicator of competitive toughness: what matters is its cross-effect with EIS. We also extend the model to the case of non-CES preferences to capture variable markups.
One of the most important indicators of company's success is the increase of its value. The article investigates traditional methods of company's value assessment and the evidence that the application of these methods is incorrect in the new stage of economy. So it is necessary to create a new method of valuation based on the new main sources of company's success that is its intellectual capital.
We study Krugman's core–periphery (CP) model for most general cases of nonidentical regions and fully characterize instant and long-run equilibria. Assuming immobility of labor, we describe the behavior of equilibrium wages/real wages. Moreover, the relative wages/real wages of industrial workers can both increase and decrease with the population with which they are associated. Under the assumption of industrial labor mobility, possible patterns of economic evolution, as responses to trade freeness, are fully described. We show that in the case of noticeable agricultural asymmetry, all mobile labor inevitably accumulates in countries with larger agricultural populations.
The purpose of paper is to investigate how the interplay of trade, commuting and communication costs shapes economy at both inter-regional and intra-urban level. Specifically, we study how trade affects the internal structure of cities and how decentralizing the production and consumption of goods in secondary employment centers allows firms located in a large city to maintain their predominance. The feature of approach is using of two-dimensional city pattern instead of the "long narrow city'' model.
We study multiregional extension of Krugman's Core-Periphery model. Comprehensive characterization of agglomeration stability
is obtained in terms of the basic parameters of model. In particular, condition of uniqueness of the stable total agglomerated equilibrium were obtained. The main feature of this paper is that the considered model is asymmetric, i.e., uneven allocation of the immobile (agricultural) population across regions is allowed. Unlike the previously known results for asymmetric CP model, which were based on numerical simulations, this research is quite analytical.
Smoking is a problem, bringing signifi cant social and economic costs to Russiansociety. However, ratifi cation of the World health organization Framework conventionon tobacco control makes it possible to improve Russian legislation accordingto the international standards. So, I describe some measures that should be taken bythe Russian authorities in the nearest future, and I examine their effi ciency. By studyingthe international evidence I analyze the impact of the smoke-free areas, advertisementand sponsorship bans, tax increases, etc. on the prevalence of smoking, cigaretteconsumption and some other indicators. I also investigate the obstacles confrontingthe Russian authorities when they introduce new policy measures and the public attitudetowards these measures. I conclude that there is a number of easy-to-implementanti-smoking activities that need no fi nancial resources but only a political will.