Continuous space core-periphery model with transport costs in differentiated agriculture

TL;DR

This paper extends the core-periphery model with transport costs to continuous space, analyzing stability and agglomeration phenomena influenced by transport costs and preferences in differentiated agriculture.

Contribution

It introduces a continuous space extension of the core-periphery model and examines stability, redispersion, and agglomeration effects under varying transport costs and preferences.

Findings

Homogeneous solution is unstable but can stabilize with low transport costs or strong preferences.

Numerical simulations show formation of spike-like agglomerations from unstable states.

Lower transport costs and stronger preferences promote agglomeration.

Abstract

The core-periphery model with transport costs in differentiated agriculture is extended to continuous space. A homogeneous stationary solution is unstable but exhibits redispersion that it is stabilized by sufficiently low manufacturing transport costs or sufficiently strong preference for manufacturing variety. It is numerically observed that a solution starting from around the unstable homogeneous solution eventually forms a spike-like agglomeration. Furthermore, the redispersion also appears in the sense that the number of the spikes goes from decreasing to increasing as the manufacturing transport costs decrease. It is also observed that lower agricultural transport costs and stronger preference for agricultural variety promote agglomeration.