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Economic Geography - The Integration of Regions and Nations


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Combes, Mayer, and Thisse have just given me an indispensable teaching tool and a great text for my students. Their book offers the most up-to-date, balanced, comprehensive treatment of both theoretical and empirical research. -- Kiminori Matsuyama, Northwestern University In the field of geographical economics, this is exactly the kind of book that I have been waiting for. After presenting lucid and comprehensive coverage of the current state of theory, it provides the modern methodology for measuring spatial concentration and inequalities. Then it confronts the challenging task of comparing theory with facts. This book will serve as an ideal textbook for graduate students and scholars in economic geography, regional development, international trade, and public policy. -- Masahisa Fujita, RIETI, Japan Economic geography has undergone something of a revolution in the last fifteen years with the application of formal theoretical modeling and econometric estimation to old questions. The many advances have, however, left us with a literature that is discursive, disparate, and disjointed. This book does an exceptional job of adding the needed structure, and helps all of us move toward a more complete and integrated understanding of this still-evolving area. -- James R. Markusen, University of Colorado at Boulder Combes, Mayer, and Thisse have put together a marvelous book on economic geography. With clear, lucid writing, they present the theory and empirics of economic geography in a way that will provide insights to both those new to the field and those in search of an excellent reference work. -- David Weinstein, Columbia University Combes, Mayer, and Thisse have produced the rare text that is of value to both theorists and empirical researchers. They present the current state of knowledge about economic geography in an accessible way, paying equal attention to formal models and applied work. Their framework provides an elegant synthesis of concepts in regional economics, international trade, and economic development, which will be of broad interest to scholars and policymakers alike. -- Gordon Hanson, University of California, San Diego A welcome addition to the literature. The authors are well-known researchers in the subject both on the theoretical and empirical sides. They put heavy emphasis on recent empirical research, not only reviewing the literature but also teaching the methodologies commonly used. No existing textbook in economic geography does this. This book fills a real gap. -- Philippe Martin, coauthor of "Economic Geography and Public Policy" This book is well-written, extremely clear, and very well-focused. Other books are either too advanced for anyone starting in the field or too basic to be of any use beyond basic undergraduate courses. Beyond teaching, this book should also be very useful as a reference. -- Gilles Duranton, University of Toronto

Table of Contents

Foreword xiii Acknowledgments xxiv Part I: Facts and Theories 1 CHAPTER 1: Spatial Inequalities: A Brief Historical Overview 3 1.1 The Space-Economy and the Industrial Revolution 4 1.2 Regional Disparities: When an Ancient Phenomenon Becomes Measurable 12 1.3 Concluding Remarks 25 CHAPTER 2: Space in Economic Thought 26 2.1 Economics and Geography: A Puzzling History of Reciprocal Ignorance 27 2.2 Integrating Space in Economics: The Main Attempts 30 2.3 The Burden of Modeling Constraints 31 2.4 The Breakdown of the Competitive Paradigm in a Spatial Economy 35 2.5 What Are the Alternative Modeling Strategies? 41 2.6 Increasing Returns and Transport Costs: The Basic Trade-Off of Economic Geography 43 2.7 Concluding Remarks 48 Part II: Space, Trade, and Agglomeration 51 CHAPTER 3: Monopolistic Competition 53 3.1 The Dixit-Stiglitz Approach 55 3.2 Monopolistic Competition: A Linear Setting 71 3.3 Concluding Remarks 79 3.4 Related Literature 80 CHAPTER 4: Interregional Trade and Market Size 81 4.1 The Dixit-Stiglitz-Krugman Model of Trade 82 4.2 The Home-Market Effect 89 4.3 Concluding Remarks 98 4.4 Related Literature 100 CHAPTER 5: Gravity and Trade Costs 101 5.1 The Gravity Model 103 5.2 Trade Costs 115 5.3 Concluding Remarks 127 5.4 Related Literature 127 CHAPTER 6: The Core-Periphery Structure 130 6.1 Increasing Returns and Industrialization 133 6.2 Regional Disparities: The Krugman Model 137 6.3 The Krugman Model Revisited 160 6.4 Concluding Remarks 162 6.5 Related Literature 164 CHAPTER 7: Intermediate Goods and the Evolution of Regional Disparities 166 7.1 The Role of Intermediate Goods 169 7.2 The Spatial Distribution of the Manufacturing Sector 176 7.3 The Evolution of Regional Disparities 185 7.4 Concluding Remarks 191 7.5 Related Literature 192 CHAPTER 8: The Bell-Shaped Curve of Spatial Development 194 8.1 A Linear Core-Periphery Model 196 8.2 When Does the Bell-Shaped Curve Arise? 207 8.3 Concluding Remarks 221 8.4 Related Literature 222 CHAPTER 9: Spatial Competition 223 9.1 Spatial Duopoly a la Hotelling 224 9.2 Spatial Oligopoly a la Cournot 238 9.3 Concluding Remarks 250 9.4 Related Literature 251 Part III: Breadth and Determinants of Spatial Concentration 253 CHAPTER 10: Measuring Spatial Concentration 255 10.1 The Properties of an Ideal Index of Spatial Concentration 256 10.2 Spatial Concentration Indices 259 10.3 Indices Accounting for Industrial Concentration 266 10.4 The Duranton-Overman Continuous Approach 269 10.5 Concluding Remarks 274 10.6 Related Literature 274 CHAPTER 11: Determinants of Spatial Concentration and Local Productivity 276 11.1 The Determinants of Spatial Concentration 277 11.2 The Determinants of Local Productivity 283 11.3 Concluding Remarks 300 11.4 Related Literature 301 CHAPTER 12: The Empirics of Economic Geography 302 12.1 A General Framework 303 12.2 Location of Firms 307 12.3 Home-Market Effect 314 12.4 Factor Prices and Economic Geography 321 12.5 Migrations 329 12.6 The Stability of Spatial Patterns 332 12.7 Concluding Remarks 340 12.8 Related Literature 342 CHAPTER 13: Theory with Numbers 343 13.1 Predictions Based on the Dixit-Stiglitz-Krugman Model 345 13.2 Simulations in an Estimated Model of the French Space-Economy 356 13.3 Concluding Remarks 363 13.4 Related Literature 364 CHAPTER 14: Concluding Remarks 365 14.1 The Paradox of the Global Village 365 14.2 The Objective of Economic Geography 367 14.3 What Have We Learned? 368 14.4 Where Next? 374 References 379 Index 397

About the Author

Pierre-Philippe Combes is CNRS research professor of economics at the Universite d?Aix-Marseille. Thierry Mayer is professor of economics at the Universite Paris 1 Pantheon-Sorbonne. Jacques-Francois Thisse is professor of economics at the Universite Catholique de Louvain and professor at the Ecole Nationale des Ponts et Chaussees. His books include "Economics of Agglomeration".


"Economic Geography: The Integration of Regions and Nations is an outstanding contribution to the field... Even those most familiar with the economic geography literature will emerge from reading the book challenged, engaged, and enlightened."--Donald R. Davis, Journal of International Economics "The book delivers important insights into the theories and practices of economic geography and opens opportunities for new avenues of research, by providing extensions of the existing theoretical models which can form the basis of new applications and tests to these theories... [T]his book is highly recommended for both academic and graduates."--V?tor Braga, Economic Geography Research Group "[T]he book by Combes et al. gives an excellent overview of identification, estimation, omitted variables, reverse causality, sorting and evaluation issues related to geographical economics modeling outcomes as well as urban economics and interaction modeling outcomes. Empirical researchers will appreciate the overviews given here."--Frank Van Oort, Regional Studies

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