Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/159083
Authors: 
Ottaviano, Gianmarco
Year of Publication: 
1996
Series/Report no.: 
Quaderni - Working Paper DSE 240
Abstract: 
This paper investigates the possibility of endogenous fluctuations in the international distribution of economic activities in the presence of increasing returns, monopolistic competition, trade and convex adjustment costs. Differently from the existing literature, it does not allow for any local productive externalities. Using a 2-country dynamic general equilibrium model, it derives necessary and sufficient conditions for the existence of self-reinforcing relocation processes. It shows that the occurrence of multiple equilibria and endogenous fluctuations is associated with a high degree of increasing returns to scale as well as low trade and adjustment costs. Under such circumstances relocation processes are driven by self-fulfilling expectations.
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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