A competitive model of economic geography

Summary. Most of the literature argues that competitive analysis has nothing interesting to say about location. This paper argues, to the contrary, that a competitive model can have something interesting to say about location, provided that locations are not identical and transportation costs are not zero. To do this, it constructs a competitive intertemporal general equilibrium model and applies it to a suggestive example of migration.Received: 25 August 2003, Revised: 18 December 2003, JEL Classification Numbers: D5, R0.Our interest in this topic has been stimulated over the years by many conversations with Marcus Berliant. We thank an anonymous referee for exceptionally careful and useful comments. Financial support from the UCLA Academic Committee on Research (Ellickson, Zame) and the National Science Foundation (Zame) is gratefully acknowledged. Views expressed here are those of the authors and do not necessary reflect the views of any funding agency.