We use detailed micro-geographic data to document the location patterns of Canadian manufacturing industries and changes in those patterns during the first decade of 2000. Depending on industry classifications and years, 40 to 60% of industries are geographically localized, i.e., are spatially clustered relative to overall manufacturing. Although some industries are increasingly clustered, localization has generally decreased in Canada according to our measures. We further document the locational trends of small plants, young plants, and exporters. Their location patterns do not differ significantly from that of the other plants in their industries.
We develop a spatial monopolistic competition model in which city structure formation is entirely driven by market interactions. When preferences and transport costs are described by real analytic functions, equilibrium land-use patterns are segregated. We completely solve the case of quasilinear quadratic preferences and quadratic transport costs. The city is monocentric when firms are few, duocentric when they are neither too few nor too many, and involves a residential central area bordered by two commercial clusters when firms are many. In the long-run equilibrium, the city size and its spatial structure may change swiftly in response to tiny variations in the opportunity cost of land. Our model captures spatial price dispersion without involving any search frictions.
This paper analyzes international high-skilled migration caused by financial frictions in educational market. I develop a model of learning in which acquisition of skill is only possible through personal interaction with a skilled individual; the income of the skilled is sensitive to financial constraints for the unskilled. Cross-country differences in such constraints have a multiplicative effect on the skill premium, causing outmigration of skilled individuals from a less developed country. I study welfare implications of such brain drain for the sending and receiving countries. Although it makes more difficult skill acquisition in the sending country, the unskilled may still be better off: increased cost of skill acquisition is offset by higher income once the skill has been acquired. For the receiving country, I identify a phenomenon of immiserizing immigration: a depletion of the stock of skill in the sending country due to brain drain hinders further production of skill, which may hurt the receiving country. Additionally, I find that increased openness of the sending country to migration and the resultant accelerated brain drain increase the incentives of the country government to reduce financial frictions.
We investigate the geographical distribution of economic activity and wages in a general equilibrium model with many asymmetric regions and costly trade. As shown by extensive simulations on random networks, local market size better explains a region's industry share, whereas accessibility better explains a region's wage. The correlation between equilibrium wages and industry shares is low, thus suggesting that the two variables operate largely independently. The model replicates well the spatial distribution of industry using Spanish data, yet overpredict changes in that distribution due to changes in 'generalized transport costs'. The latter had only small impacts on changes in the geographical distribution of economic activity in Spain from 1980 to 2007.
Residents are often offered on-street parking at a fraction of the market price which may cause excess car ownership. However, residential parking costs are difficult to observe, so we propose an approach to estimate implicit residential parking costs and then examine the effect of these costs on household car ownership. We apply our approach to the four largest metropolitan areas of the Netherlands. Our results indicate that for city centres, annual residential parking costs are around €1000, or roughly 17 percent of car ownership costs, and are more than double the costs in the periphery. Our empirical estimates indicate that the disparity in parking costs explains around 30% of the difference in average car ownership rates between these areas and corresponds to a price elasticity of car demand of about −0.7. We apply these estimates to gauge the potential implications of automated vehicles which suggests that, if residents no longer require parking nearby their homes, car demand in city centres may increase by 8–14 percent.
The effects of autonomous vehicles (AVs) on urban forms are modeled, calibrated, and analyzed. Vehicles are used for commute between peripheral home and central work, and require land for parking. An advantage of AVs is that they can optimize the location of day parking, relieving downtown land for other uses. They also reduce the per-kilometer cost of commute. Increased AV availability increases worker welfare, travel distances, and the city size. Land rents increase in the center but decrease in the periphery. Possible locations of AV daytime parking are analyzed. The effects of AV introduction on traffic and on mass transit coverage are discussed.