A NOTE ON THE STABILITY PROPERTY OF SPATIAL COMPETITION*

ABSTRACT. Our study extends the standard comparative static analysis to allow for dynamic aspects of equilibrium in spatial competiton. We investigate dynamic stability properties via the Routh-Hurwitz criterion. Nontrivial equilibria in the so-called Löschian, Hotelling-Smithies, and Greenhut-Ohta models are shown to be stable even under heterogeneous cost conditions among competing firms, conditions not considered hitherto. We can thus provide powerful support to the comparative static analyses which can only be developed via equilibrium concepts with stability properties.     

A NOTE ON REAL WAGE RIGIDITY AND STATE UNEMPLOYMENT RATES*

ABSTRACT This paper extends the research of Hyclak and Johnes (1989) in analyzing the relationship between the rigidity in real wages and state unemployment rates. It presents evidence contrary to the empirical findings of Hyclak and Johnes in that measures of real wage rigidity are not robust over time in explaining changes in state unemployment rates. Moreover, an alternative proxy accounting for divergent growth patterns across states does not significantly affect changes in state unemployment rates.     

URBAN UNEMPLOYMENT AND THE SPATIAL STRUCTURE OF LABOR MARKETS: AN EXAMINATION OF THE “TODARO PARADOX” IN A SPATIAL CONTEXT*

ABSTRACT The Todaro paradox and the effects of job creation in urban areas will be re-examined in our spatial model in which the radius of the labor market is endogenously determined by the rational choices of workers. The travel cost of workers plays a crucial role in the choice between two different types of response, migration or commuting. By considering travel costs, we find that the Todaro paradox can be applied to developed, as well as developing, countries. Job creation in urban areas can produce a paradoxical increase in urban unemployment in developed countries, because the low marginal cost of travel will significantly increase the radius of the urban labor market and create new labor supply without migration.     

A NOTE ON THE POLITICAL EXPENDITURE CYCLE IN LATIN AMERICA*

In an earlier paper I established that Latin American executives both civilian and military, manipulate aggregate public expenditures so as to maximize their chances of retaining office. This paper carries the analysis further by elaborating five probable strategies, each consequent to the socio-political conditions executives face, and links strategies to tradeoffs in various programs' shares of the budget at crucial periods. The results suggest that in fact executives do respond to their survival problems by manipulating expenditure shares.     

THE INFLUENCE OF ECONOMIC DIVERSITY ON UNEMPLOYMENT AND STABILITY*

ABSTRACT. For many years, regional scientists, economists, and geographers have been unable to clarify the influence of economic diversity on unemployment and instability in regional economies of the United States, the United Kingdom, and Canada. This article presents plausible theory, proper units of analysis, valid measures, and more inclusive models of the diversity-stability relationship. The findings are generalizable because the sample includes most metropolitan areas in the U.S. The empirical analysis estimates the influence of diversity, employment concentrated in unstable industries, population size, growth rate, and control variables on unemployment and employment instability during the 1972–88 period. The results indicate that metropolitan areas which are more diverse experience lower unemployment rates and less instability than areas which are less diverse.     

SPATIAL AUTOCORRELATION IN BRITISH UNEMPLOYMENT

ABSTRACT. The recent literature on local unemployment in Britain and the U.S. is reviewed, and a model estimated for Britain which is consistent with the findings of that literature. Spatial econometric techniques are applied to test and elaborate on that model. The results indmte the presence of significant spillovers in adjustments to local demand shocks. These spillovers occur over a wide spatial field and are strongest after a lag, suggesting that they reflect migration behavior. In addition, highly localized spatial interactions are found, consistent with commuting adjustments in response to shocks. Incorporating these effects eliminates spatial autocorrelation from the residuals. A simulation exercise is undertaken to demonstrate the effects of supply- and demand-side shocks on the model solution.     

A NOTE ON TRANSPORTATION RATES AND LOCATION OF THE FIRM IN A TWO-DIMENSION,n-INPUT SPACE*

This paper examines the theoretical implications of quantity-discounted transportation rates on the optimum location decision of the firm. It shows that the linearly homogeneous or homothetic production function is not a sufficient condition for the independence between the optimum location and the output level, unless (i) the elasticities of transportation rates with respect to quantity shipped are constant and identical, and (ii) the ratios of marginal products 60 the marginal transportation costs are equal for each input.     

ON THE VARIABLE SHAPE OF THE FREE SPATIAL DEMAND FUNCTION*

ABSTRACT Analytical evidence is presented confirming variations in the shape of the free spatial demand function under different market conditions. For some simple spatial configurations of consumers, the transformation from convexity to concavity may be conveniently observed using graphical methods. The key criteria for concavity of the free spatial demand function are certain combinations of concave consumer demand, nonuniform consumer density, and/or nonlinear transportation costs. Although findings are confined to free spatial demand, similar variations may be expected to hold for the competitive case.