Pascal Mossay

INCREASING RETURNS AND HETEROGENEITY IN A SPATIAL ECONOMY

We study a general equilibrium model of global trade and local migration in a continuous geographical space. Trade is based on the Dixit-Stiglitz model of monopolistic competition. Migration is modelled as a local interaction decision process. Incentives for migration are of two types: homogeneous incentives of the group, associated with the identity of taste for higher utility levels, and heterogeneous incentives, due to idiosyncrasies in location taste. The impact of migration on the regional structure is twofold. First, when driven by utility differentials, it contributes to agglomeration because of the presence of increasing returns. Second, when reflecting heterogeneous individual choices, it fosters regional convergence. Furthermore, the size of agglomerations, when they occur, increases with the taste for variety and the proportion of the manufacturing population, and decreases with transport costs.

On spatial equilibria in a social interaction model

Social interactions are at the essence of societies and explain the gathering of individuals in villages, agglomerations, or cities. We study the emergence of multiple agglomerations as resulting from the interplay between spatial interaction externalities and competition in the land market. We show that the geographical nature of the residential space tremendously affects the properties of spatial equilibria. In particular, when agents locate on an open land strip (line segment), a single city emerges in equilibrium. In contrast, when the spatial economy extends along a closed land strip (circumference), multiple equilibria with odd numbers of cities arise. Spatial equilibrium configurations involve a high degree of spatial symmetry in terms of city size and location, and can be Pareto-ranked.

Existence and Uniqueness for a Spatial Model of Social Interactions

We extend Beckmanns spatial model of social interactions to the case of a two‐dimensional spatial economy with a large class of utility functions, accessing costs, and space‐dependent amenities. We show that spatial equilibria derive from a potential functional. By proving the existence of a minimizer of the functional, we obtain that of spatial equilibrium. Under mild conditions on the primitives of the economy, the functional is shown to satisfy displacement convexity. Moreover, the strict displacement convexity of the functional ensures the uniqueness of equilibrium. Also, the spatial symmetry of equilibrium is derived from that of the primitives of the economy.

Preferential trade agreements harm third countries

In this paper, we study market liberalization in an imperfectly competitive environment in the presence of price effects. For this purpose, we build a three-country model of international trade under monopolistic competition with endogenous prices and wages. The neighboring effect translates how the size effect propagates across countries. When some country increases in size, its relative wage increases, as well as that in a small and near country, while that in a large and distant country falls. We also show that a preferential trade agreement increases the relative wage, the welfare, and the terms-of-trade in the partner countries, where the integration effect dominates, while it lowers those in the third country.

Pulsating Equilibria: Stability through Migration

Takao FujimotoFukuoka University,Fukuoka, 814-0180, JapanE-mail: takao@econ.fukuoka-u.ac.jpMingzhe LiFukuoka University,Fukuoka, 814-0180, JapanE-mail: lmz@fukuoka-u.ac.jpPascal MossayUniversity of Alicante,Alicante, 03080, SpainE-mail: mossay@merlin.fae.ac.esThis paper is to present a model of spatial equilibrium using a nonlinear gener-alization of Markov-chain type model, and to show the dynamic stability of aunique equilibrium. Even at an equilibrium, people continue to migrate amongregions as well as among agent-types, and yet their overall distribution remainunchanged. The model is also adapted to suggest a theory of traffic distributionin a city.Keywords: Indecomposability, Nonlinear Positive Mappings, Primitivity, Spa-tial Equilibrium, Stability, Traffic Network.

Perfect competition in a continuous spatial economy

Abstract We present a model of spatial adjustments of economic agents across perfectly competitive locations distributed along a continuous geographical space. The evolution of the spatial economy is governed by a set of partial differential equations. We perform a local stability analysis around the uniform steady-state by using the method of normal modes. Examples are presented for the case of two consumer types and two local goods. The spatial stability of the uniform steady-state depends crucially on whether the law of demand holds.