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Contents
List of figurespage ix
List oftables xii
List oftechnical notes xiv
List ofspecial interest boxes xv
List ofsymbols xvi
List ofparameters xvii
Preface xix
Suggested course outline xxii
1A first look at geography,trade,and development 1
1.1Introduction1
1.2Clusters in the world economy2
1.3Economic interaction9
1.4 Rapid change in the distribution ofpopulation and production15
1.5 Overview ofthe book16
Appendix18
Exercises21
2Geography and economic theory 22
2.1Introduction22
2.2Geography in regional and urban economics23
2.3Trade theory37
2.4Economic growth and development50
2.5Conclusions56
Exercises57
3 The core model ofgeographical economics 59
3.1Introduction59
3.2An example ofgeographical economics60
3.3The structure ofthe model63
3.4Demand66
3.5Supply76
3.6Transport costs:icebergs in geography80
3.7Multiple locations83
3.8Equilibrium85
3.9A few remarks on dynamics93
3.10The simple example and the core model94
Exercises97
4Solutions and simulations 100
4.1Introduction100
4.2Short-run equilibrium100
4.3Some first results103
4.4Structural change I:transport costs105
4.5Structural change II:other parameters106
4.6Normalization analysis108
4.7Sustain and break analysis110
4.8Welfare115
4.9Stability and welfare in the limit118
4.10The racetrack economy:many locations in neutral space119
4.11Conclusions123
Appendix124
Exercises126
5Geographical economics and empirical evidence 128
5.1Introduction128
5.2The spatial distribution ofeconomic activity129
5.3The facts and economic theory138
5.4The relevance ofgeographical economics I:the home-market
effect141
5.5The relevance ofgeographical economics II:a spatial wage
structure145
5.6A case study:the spatial wage structure for Germany154
5.7Conclusions164
Exercises165
6Refinements and extensions 167
6.1 Introduction167
6.2Type I extensions:non-neutral space and transport costs168
6.3Type II extensions:production structure and geography177
6.4Type III extensions:the burden ofhistory and the role of
expectations182
6.5Conclusions185
Exercises186
7Cities and congestion:the economics ofZipf’s Law 187
7.1Introduction187
7.2Congestion as an additional spreading force190
7.3Zipf’s Law:definition,data,and estimation results198
7.4Explanations for Zipf’s Law:the congestion model and other
approaches208
7.5Conclusions219
Appendix220
Exercises221
8Agglomeration and international business 222
8.1Introduction222
8.2Multinational production:stylized facts223
8.3 Explaining multinational production224
8.4Multinationals in geographical economics230
8.5Empirical evidence237
8.6Conclusions243
Exercises244
9The structure ofinternational trade 245
9.1Introduction245
9.2Two manufacturing sectors248
9.3Comparative advantage:Ricardo249
9.4Comparative advantage:factor abundance255
9.5Migration262
9.6Gravity265
9.7Conclusions271
Appendix 271
Exercises272
10Dynamics and economic growth 274
10.1Introduction274
10.2Adjustment dynamics275
10.3Some stylized facts ofeconomic growth281
10.4Explaining the facts:endogenous growth and simulation
dynamics I286
10.5Simulation dynamics II:an experiment289
10.6Economic growth296
10.7Conclusions302
Appendix 303
Exercises304
11The policy implications and value-added ofgeographical economics 305
11.1Introduction305
11.2Building a bridge:a simple policy experiment in non-neutral
space306
11.3Policy relevance ofgeographical economics313
11.4An assessment ofgeographical economics317
11.5Geographical economics in 2020324
Appendix 1 326
Appendix 2 329
References 331
Index 344



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