On the Endogeneous Formation of Secondary Employment Centers in a City

A new approach is proposed to explain the formation of secondary employment centers in a monocentric city. Specifically, a large firm considers locating a new plant in a city where none of the existing businesses has a significative share of the labor force, so that its location can be viewed as a secondary employment center. The choice of this location results from the interplay between the process of competition on both the labor and land markets and the technological externalities generated by the proximity of the city center where other firms are located.     

Monopolistic competition and income dispersion

We develop a model of monopolistic competition that accounts for consumers’ heterogeneity in both incomes and preferences. This model makes it possible to study the implications of income redistribution on the toughness of competition. We show how the market outcome depends on the joint distribution of consumers’ tastes and incomes and obtain a closed-form solution for a symmetric equilibrium. Competition toughness is measured by the weighted average elasticity of substitution. Income redistribution generically affects the market outcome, even when incomes are redistributed across consumers with different tastes in a way such that the overall income distribution remains the same.     

Verti-zontal differentiation in export markets

Many trade models of monopolistic competition identify cost efficiency as the main determinant of firm performance in export markets. To date, the analysis of demand factors has received much less attention. We propose a new model where consumer preferences are asymmetric across varieties and heterogeneous across countries. The model generates new predictions and allows for an identification of horizontal differentiation (taste) clearly distinguished from vertical differentiation (quality). Data patterns observed in Belgian firm–product level exports by destination are congruent with the predictions and seem to warrant a richer modelling of consumer demand.     

Are labor-managers really perverse?

One major problem of labor-managed firms seems to be their perverse response to price incentives. We show that this perversity is only due to an incomplete specification of the objective function of these firms.     

Outcomes of voting and planning: Condorcet,Weber and Rawls locations

The paper is concerned with the comparison of the locations of a facility resulting from voting and planning procedures. It is shown that a voting location exists and coincides with that minimizing the total distance covered by the users to go to the facility when the transportation network contains no cycles. For a general network, least upper bounds on the ratio of the social values of the voting and planning locations are given in the cases where the total or the maximal travelled distance is minimized.     

Patent Breadth, Patent Life, and the Pace of Technological Progress

In active investment climates where firms sequentially improve each other's products, a patent can terminate either because it expires or because a non-infringing innovation displaces its product in the market. We define the length of time until one of these happens as the effective patent life, and show how it depends on patent breadth. We distinguish lagging breadth, which protects against imitation, from leading breadth, which protects against new improved products. We compare two types of patent policy with leading breadth: (1) patents are finite but very broad, so that the effective life of a patent coincides with its statutory life, and (2) patents are long but narrow, so that the effective life of a patent ends when a better product replaces it. The former policy improves the diffusion of new products, but the latter has lower R&D costs.     

Technology Choice and Market Structure: strategic aspects of flexible manufacturing

This paper shows that the adoption of flexible manufacturing techniques by firms leads to a tougher price regime. However, consumers may not benefit since the tougher regime deters entry. Flexible manufacturing's ability to deter entry is moderated by two factors: non-prohibitive costs of re-anchoring flexible manufacturing processes and the possibility that entrants choose to produce niche products using designated technologies rather than adopt flexible manufacturing. Market preemption that deters entry will be characterized by excessive product variety. Alternatively, flexible manufacturers may prefer to accommodate entry by small-scale, niche firms. Moreover, ownership matters in determining equilibrium product configurations.     

Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Loses from It?

This paper proposes a two-region model of endogenous growth, which is a natural combination of a core–periphery model à la Krugman and an endogenous growth model à la Grossman/Helpman/Romer. The innovation activity in the R&D sector involves knowledge externalities among skilled workers. Our analysis supports the idea that the additional growth spurred by agglomeration may lead to a Pareto-dominant outcome such that, when the economy moves from dispersion to agglomeration, innovation follws a much faster pace. As a consequence, even those who stay put in the periphery are better off than under dispersion, provided that the growth effect triggered by the agglomeration is strong enough.
JEL Classification Numbers: F43, O18, R11