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Of Hype and Hyperbolas: Introducing the New Economic Geography

J. Peter Neary

University College Dublin and CEPR.

Journal of Economic Literature 2001

Reviewing The Spatial Economy by Fujita, Krugman, and Venables, this paper argues that the key contribution of the new economic geography is a framework in which standard building blocks of mainstream economics (especially rational decision making and simple general equilibrium models) are used to model the trade-off between dispersal and agglomeration. The approach thus gives a choice-theoretic basis for a “propensity to agglomerate.”

DOI
10.1257/jel.39.2.536
Volume
39 (2)
Pages
536-561
Language
en
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