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Multiple equilibria, stability, and asymmetries in Krugman's core‐periphery model *
Author(s) -
Lanaspa Luis Fernando,
Sanz Fernando
Publication year - 2001
Publication title -
papers in regional science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.937
H-Index - 64
eISSN - 1435-5957
pISSN - 1056-8190
DOI - 10.1111/j.1435-5597.2001.tb01212.x
Subject(s) - economics , stability (learning theory) , core (optical fiber) , mathematical economics , outcome (game theory) , extension (predicate logic) , population , econometrics , microeconomics , physics , computer science , demography , machine learning , sociology , optics , programming language
Paul Krugman developed a general equilibrium model with two sectors and two regions in 1991, from which two patterns of industrial localization could be endogenously deduced, dispersion at 50% and total concentration. The introduction of transport costs, which depend on the size of the population, are meant to capture effects produced by the trade‐off between congestion costs and advantages derived from the possession of infrastructure, thus generates stable asymmetric multiple equilibria. The outcome of asymmetric stable multiple equilibria demonstrates the fruitfulness of this extension of the original model.