Keywords: Geographic concentration, establishment size, transportation costs
Abstract: Big cities specialize in services rather than manufacturing. Big-city
establishments in services are larger than the national average while
those in manufacturing are smaller. This paper proposes an explanation
of these and other facts. The theory is developed in an economic geography
model that is an alternative to the standard Dixit-Stiglitz structure.
In our tractable structure that has potentially wider application, firms
have monopoly power in local markets, but are price takers in export
Full paper (459 KB PDF)
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Last update: April 3, 2002