We modify Paul Krugman's (1991) 'Core-Periphery' model by replacing the traditional competitive sector with a monopolistically competitive one. We show that the structure of spatial equilibria remains the same as in the original model. This result continues to hold true under Cournot or Bertrand oligopolistic competition with free entry in the traditional sector. The key factor that explains why the nature of competition in the traditional sector does not matter for the spatial equilibria is constant expenditure shares-due to nested Cobb-Douglas and CES preferences-which imply that trade in the traditional sector is independent from its sectoral characteristics. © 2013 Elsevier B.V.

Competition in the Traditional Sector Does Not Matter for the 'Core-Periphery' Model / Behrens, K.; Kichko, S.; Zhelobodko, E.. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - ELETTRONICO. - 2014, 122:1(2014), pp. 94-99. [10.1016/j.econlet.2013.11.002]

Competition in the Traditional Sector Does Not Matter for the 'Core-Periphery' Model

Kichko S.;
2014-01-01

Abstract

We modify Paul Krugman's (1991) 'Core-Periphery' model by replacing the traditional competitive sector with a monopolistically competitive one. We show that the structure of spatial equilibria remains the same as in the original model. This result continues to hold true under Cournot or Bertrand oligopolistic competition with free entry in the traditional sector. The key factor that explains why the nature of competition in the traditional sector does not matter for the spatial equilibria is constant expenditure shares-due to nested Cobb-Douglas and CES preferences-which imply that trade in the traditional sector is independent from its sectoral characteristics. © 2013 Elsevier B.V.
2014
1
Behrens, K.; Kichko, S.; Zhelobodko, E.
Competition in the Traditional Sector Does Not Matter for the 'Core-Periphery' Model / Behrens, K.; Kichko, S.; Zhelobodko, E.. - In: ECONOMICS LETTERS. - ISSN 0165-1765. - ELETTRONICO. - 2014, 122:1(2014), pp. 94-99. [10.1016/j.econlet.2013.11.002]
File in questo prodotto:
File Dimensione Formato  
BehrensKichkoZhelobodko_EL.pdf

Solo gestori archivio

Tipologia: Versione editoriale (Publisher’s layout)
Licenza: Tutti i diritti riservati (All rights reserved)
Dimensione 370.84 kB
Formato Adobe PDF
370.84 kB Adobe PDF   Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11572/344132
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 2
  • ???jsp.display-item.citation.isi??? 2
  • OpenAlex ND
social impact