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- Title
A third sector in the core-periphery model: non-tradable goods.
- Authors
Leite, Vasco; Castro, Sofia; Correia-da-Silva, João
- Abstract
We extend an analytically solvable core-periphery model by introducing a monopolistically competitive sector of non-tradable goods that is mobile across regions. We find that when the elasticity of substitution among non-tradable goods is very low, there is agglomeration of all the production (of both tradable and non-tradable goods). When the elasticity of substitution among non-tradable goods is sufficiently high ('no black-hole' condition), then there is symmetric dispersion of all the production, if trade costs are high; or full agglomeration of the production of tradable goods with partial agglomeration of the production of non-tradable goods, if trade costs are low.
- Subjects
ECONOMIC sectors; ECONOMIC models; NONTRADED goods; ECONOMIC competition; ECONOMIES of agglomeration; SUBSTITUTION (Economics)
- Publication
Annals of Regional Science, 2013, Vol 50, Issue 1, p71
- ISSN
0570-1864
- Publication type
Article
- DOI
10.1007/s00168-011-0479-8