Spatial Scale of Agglomeration and Dispersion: Theoretical Foundations and Empirical Implications

Abstract

This paper studies the theoretical properties of existing economic geography models with agglomeration and dispersion forces in a many-region setup, rather than their original two-region space, to investigate the spatial scale--global or local--of agglomeration and dispersion intrinsic to each model. We show that models in the literature reduce to two canonical classes that differ starkly in their engendered spatial patterns and comparative statics. Our formal results offer a consistent explanation for the set of various outcomes from the extant reduced-form regression analyses and also provide qualitative predictions of the treatment effects in the structural model-based studies on regional agglomeration.