Economic analysis of industrial agglomeration

Abstract

This book investigates the industrial agglomeration and dispersion within a country under trade liberalization and interregional integration by considering both economic forces and geographical elements. First, it provides a detailed explanation of Krugman's new economic geography (NEG) model and reviews the subsequent refinements of the original model from mainly geographical viewpoints. It points out that many existing models are isomorphic and their two-region assumptions seem unrealistic. Second, this book extends Krugman's original model to a two-country and three-region case where the domestic regions are fully asymmetrical in terms of their sizes and accessibilities to global markets. By incorporating the geographical elements into the original NEG model, this book explains the increasing industrial agglomeration in countries in the process of international trade liberalization and regional integration. Additionally, the analytical model provides a reasonable explanation for industrial dispersion.