Springer

Factor distribution, capital intensity and spatial agglomeration

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This paper investigates the effect of capital on agglomeration behavior within a framework of the core-periphery model. Capital is interregionally mobile in the short-run, whereas labor is mobile in the long-run. In conclusion, (i) capital and industries are distributed among regions more equally than workers when transport costs are sufficiently high, and the relation is reversed when transport costs are sufficiently low, (ii) a rise in capital intensity stimulates agglomeration in the economy.

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