A HARMONIZATION OF FIRST AND SECOND NATURES* |
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| Authors: | Pierre M Picard Dao‐Zhi Zeng |
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| Institution: | 1. CREA, University of Luxembourg, 162A, avenue de la Fa?encerie, L‐1511 Luxembourg. E‐mail: pierre.picard@uni.lu;2. Graduate School of Information Sciences, Tohoku University, Miyagi 980‐8579, Japan;3. and Center for Research of Private Economy, Zhejiang University, Zhejiang 310027, China. E‐mail: zeng@se.is.tohoku.ac.jp |
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| Abstract: | ABSTRACT This paper investigates the joint impact of the first nature and the second nature forces on industry location. Toward this aim, we develop a two‐region new economic geography model where local factor congestion and location advantages compete with demand linkages and product market crowding. In particular, we study the case of absolute location advantage in a single industry model and the case of comparative advantages in a two‐industry model. We characterize the structure of industries and discuss the possibilities of catastrophic changes, endogenous industrial asymmetries and specialization. We find that absolute location advantage are associated with a smooth agglomeration process and comparative advantages with a catastrophic process. |
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