Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare.

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Presentation transcript:

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Introduction International Trade & the World Economy;  Charles van Marrewijk Paul Krugman ( )

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Zipf's Law and the gravity equation International Trade & the World Economy;  Charles van Marrewijk

Zipf's Law and the gravity equation International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

The structure of the model International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Multiple locations and equilibrium International Trade & the World Economy;  Charles van Marrewijk

Multiple locations and equilibrium International Trade & the World Economy;  Charles van Marrewijk Price index equation Income equation Wage equation (from demand = supply in manufactures sector Short-run equilibrium; given the distribution of manufacturing labour

Multiple locations and equilibrium International Trade & the World Economy;  Charles van Marrewijk Three examples

Multiple locations and equilibrium International Trade & the World Economy;  Charles van Marrewijk Manufacturing labour force adjustment

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Chapter 14 tool: computer simulations International Trade & the World Economy;  Charles van Marrewijk

Chapter 14 tool: computer simulations International Trade & the World Economy;  Charles van Marrewijk

Chapter 14 tool: computer simulations International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Welfare International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Application: predicting the location of European cities International Trade & the World Economy;  Charles van Marrewijk

Introduction Zipf's Law and the gravity equation The structure of the model Multiple locations and equilibrium Chapter 14 tool: computer simulations Welfare Application: predicting the location of European cities Conclusions CHAPTER 14; GEOGRAPHICAL ECONOMICS International Trade & the World Economy;  Charles van Marrewijk

Conclusions International Trade & the World Economy;  Charles van Marrewijk Combining various international economic theories with factor mobility provides a simple theory of location and agglomeration. Distinction short-run equilibrium (given distribution of the manufacturing labour force) and long-run equilibrium (endogenously determined by equality of real wages). Distinction stable equilibrium and unstable equilibrium. Using computer simulations: high transport costs lead to spreading of economic activity low transport costs lead to agglomeration of economic activity intermediate transport costs lead to multiple long-run equilibria Extensions of the basic model can explain empirical regularities, such as Zipf’s Law and the Gravity Equation.