The global welfare implications of home market effects in trade models with imperfect competition are little understood. This paper proposes a simple model in which such implications can be easily analyzed. It shows an overall tendency of imperfectly competitive sectors to inefficiently cluster...

This paper presents a simple framework in which the location and the growth rate of economic activities are endogenous and interact. We show that the nature of the equilibrium and of the relation between growth and location depends fundamentally on whether capital is assumed to be mobile (in...

So far the contribution of New Economic Geography (NEG) has been mainly positive. Normative analysis and policy implications have lagged behind. The reason is the fear of the consequences of taking too literally the neat structure of the models. Under this respect the somewhat incautious aim of...