Working Paper No. 504

Trade and Location with Horizontal and Vertical Multi-Region Firms

Published: October 5, 1998Pages: 35Keywords: Trade; Location; Agglomeration; Multinational firmsJEL-codes: F12; F15; R12

Trade and Location with Horizontal and Vertical Multi-Region Firms Karolina Ekholm and Rikard Forslid

This paper analyses the effect on agglomeration tendencies of allowing firms to become multi-region firms in a standard model of trade and location. More specifically, we introduce horizontal and vertical multi-region firms into the core-periphery (CP) model developed by Krugman (1991). The introduction of horizontal multi-region firms dampens the strong agglomeration effects found in the CP model by making the range of trade costs for which the core-periphery equilibrium occurs smaller. The introduction of vertical multi-region firms that can separate the location of headquarter activities from the location of production has two counteracting effects. First, headquarters have a strong tendency to agglomerate, and, in this sense, agglomeration tendencies are strengthened. Second, actual production tends to be more spread out, and, in this sense, they are weakened.

Sick of Inequality?

An Introduction to the Relationship between Inequality and Health

Sick of Inequality.jpg

In this book Andreas Bergh, Therese Nilsson, IFN and Lund University, and Daniel Waldenström, IFN and Paris School of Economics, France, review the latest research on the relationship between inequality and health. What does inequality mean for our health? Does increasing income inequality affect outcomes such as obesity, life expectancy and subjective well-being?


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