Reference : Economic Geography and the Distribution of Profits
Scientific journals : Article
Business & economic sciences : Economic systems & public economics
Economic Geography and the Distribution of Profits
Picard, Pierre M mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA) >]
Thisse, Jacques François [Center for Operations Research and Econometrics - CORE > > > ; Center for Market Studies and Spatial Economics Saint Petersburg Branch National Research University Higher School of Economics]
Journal of Urban Economics
Academic Press
Yes (verified by ORBilu)
San Diego
[en] Economic geography ; Profit distribution ; Product differentiation
[en] In modern economies, the amount of profits distributed to shareholders is far from being negligible. We show that the way they are distributed among agents matters for the space-economy. For example, the existence of mobile rentiers is sufficient to make the symmetric configuration unstable for all transport cost values and to allow for the partial agglomeration of firms. Obviously, to account for profits and for their distribution, the assumption of free entry must be abandoned. So doing, we ignore fixed costs and show that it is the combination of imperfect competition and firms’ indivisibility that matters for the formation of agglomeration in economic geography.

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