A footloose entrepreneur model with productivity heterogeneity in two regions
Abstract This article introduces the productivity heterogeneity of Melitz, M. J. (2003). Econometrica , 71(6), 1695–1725 into the footloose entrepreneur model of Forslid, R., and Ottaviano, G. I. (2003). Journal of Economic Geography , 3(3), 229–240 to explore the industrial spatial distribution bet...
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Published in | Australian economic papers |
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Main Authors | , |
Format | Journal Article |
Language | English |
Published |
02.07.2024
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Online Access | Get full text |
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Summary: | Abstract This article introduces the productivity heterogeneity of Melitz, M. J. (2003). Econometrica , 71(6), 1695–1725 into the footloose entrepreneur model of Forslid, R., and Ottaviano, G. I. (2003). Journal of Economic Geography , 3(3), 229–240 to explore the industrial spatial distribution between two regions. We suggest a negative relationship between the shape parameter of the Pareto distribution and the share of skilled workers in a region. It enhances the escape competition effect to avoid agglomeration when the share of skilled workers in a region increases to generate intensified competition. This effect allows the equal distribution outcome to be sustained for a larger range of transport costs. |
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ISSN: | 0004-900X 1467-8454 |
DOI: | 10.1111/1467-8454.12370 |