Finding equilibrium

How important is general equilibrium to the results of geographical economics?

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

This article proposes a version of the Core-Periphery model in which equilibrium is not assumed a priori, but may develop out of the choices of workers and firms. The research presented here finds that the assumption of general equilibrium present in the original model is neither a necessary nor a sufficient condition for systems to adjust to stable Nash Equilibria. This article introduces the idea of leakage to describe the minute inaccuracies in optimization that can cascade into major shifts in outcomes. This leakage plays an increasingly important role when the population is evenly spread among cities. Furthermore, as other assumptions are relaxed the effects of leakage on model stability are multiplied. This finding is of particular interest as the equilibriumbased results of geographical economics are increasingly being applied in policy settings where moderate concentrations of population and heterogeneity are the norm rather than the exception.

Original languageEnglish (US)
Article numberlbq006
Pages (from-to)457-480
Number of pages24
JournalJournal of Economic Geography
Volume11
Issue number3
DOIs
StatePublished - May 1 2011

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leakage
economics
firm
worker
present
Leakage
Economics
General equilibrium
norm
effect
city
policy
Nash equilibrium
Workers
Cascade
Core-periphery

All Science Journal Classification (ASJC) codes

  • Geography, Planning and Development
  • Economics and Econometrics

Cite this

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Finding equilibrium : How important is general equilibrium to the results of geographical economics? / Fowler, Christopher Stiles.

In: Journal of Economic Geography, Vol. 11, No. 3, lbq006, 01.05.2011, p. 457-480.

Research output: Contribution to journalArticle

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