Economic Geography: The Integration of Regions and Nations

Citation

Combes, P.-P., Mayer, T., & Thisse, J.-F. (2008). Economic Geography: The Integration of Regions and Nations. Princeton University Press.

Chapter Summary

The book is a textbook in spatial economics of about 400 pages, translated from the authors' French text of 2006. The publisher presents it as a complete, up-to-date introduction for advanced undergraduates, graduate students and researchers in economic geography, regional and urban economics, international trade and applied econometrics. It pairs the theory that explains why economic activity stays unevenly concentrated, despite the growing mobility of goods, ideas and people, with detailed discussion of the empirics of agglomeration. The published list of contents gives chapter titles without section headings; the titles fall into background, theoretical models and empirical work.

Space in Economic Thought

The opening chapter in the list supplies the history and background of the field, which the publisher names as part of the book's coverage, and sets the intellectual context for the models that follow.

Monopolistic Competition

The first modelling chapter. Monopolistic competition, with differentiated varieties and a price index, is the market structure on which the book's later models of trade and agglomeration are built; the index terms include elasticity and number of varieties.

Interregional Trade and Market Size; Gravity and Trade Costs

Two chapters on trade between regions. The first relates interregional trade to market size, and the second takes up gravity and trade costs, the link between distance and economic interaction that runs through the rest of the book.

The Core–Periphery Structure

The chapter on the core–periphery structure, the best-known model of the new economic geography. It includes a discussion of Krugman's model; the index terms refer to symmetric equilibrium and stability.

Intermediate Goods and the Evolution of Regional Disparities; The Bell-Shaped Curve of Spatial Development

Two chapters that follow the core–periphery framework. The first brings intermediate goods into the explanation of regional disparities. The second, on the bell-shaped curve of spatial development, has sections on a linear core–periphery model and on when the bell-shaped curve arises.

Spatial Competition

A chapter on competition between firms across space; the index terms mention Nash equilibrium.

Measuring Spatial Concentration; Determinants of Spatial Concentration and Local Productivity

The empirical part begins. The first chapter deals with the measurement of spatial concentration, for which the index terms list the Gini and Theil indices and the Lorenz curve; the second turns to the determinants of spatial concentration and local productivity.

The Empirics of Economic Geography; Theory with Numbers

Two chapters that bring the theory to data. The publisher says the book covers the empirics of agglomeration from the measurement of spatial concentration to structural estimations of economic geography models; the index terms mention fixed effects, explanatory variables and market potential.

Concluding Remarks

The closing chapter. According to the publisher, the book examines the future implications of the evolution of the spatial economy and relates them to other major social and economic trends.

Key Concepts

Background and Building Blocks

• Monopolistic competition: a market structure with differentiated products, the base for the later models.
• Gravity and trade costs: the relation of trade flows to distance and the costs of trading, a chapter title.

Core Models

• Core–periphery structure: a pattern in which economic activity is concentrated in a core, the subject of one chapter.
• Bell-shaped curve of spatial development: the relationship, named in a chapter title, between spatial development and economic integration.
• Agglomeration and dispersion forces: the opposing forces whose balance determines whether activity concentrates or spreads (the index lists "dispersion force").

Measurement and Estimation

• Spatial concentration measures: indices (Gini, Theil) for describing how concentrated activity is.
• Structural estimation: fitting the theoretical models to data, named in the publisher's description.

Critical Analysis

Strengths

• Theory and evidence together. The publisher stresses that theoretical analysis is complemented by discussion of the empirics, offering a mix of theory and empirical research. The chapter list bears this out: seven chapters on models are followed by four on measurement and estimation.
• A route from history to estimation. The sequence from "Space in Economic Thought" to "Theory with Numbers" lets a student see how models become testable.
• Scope. The book links agglomeration to trade, regional disparities and the integration of nations, and has a concluding chapter on future implications.

Limitations

• Formal and economics-centred. The chapter titles and the book's own index terms point to formal microeconomic models (equilibrium, elasticity, estimation) and econometrics; it is economic geography as economists practise it, not the political-economy tradition taught in many geography departments.
• Prerequisites are high. It is aimed at advanced undergraduates and graduates; readers without intermediate economics and some calculus will find it hard to follow.
• Date. Published in 2008, the book cannot include later developments in quantitative spatial modelling.

Where It Fits in the Course

This is the course's model-based, formal treatment. Economic Geography, a comprehensive survey of spatial patterns of economic activity, Introduction to Economic Geography by MacKinnon and Cumbers, which approaches the subject through globalisation, uneven development and place, and Key Concepts in Economic Geography are discipline-of-geography introductions, and make good first reading. Global Shift is a detailed, descriptive account of globalisation through transnational corporations and industries, a useful empirical counterpart to the models here. The Geography of Transport Systems covers the transport networks that lie behind trade costs.

How to Use This Book

For graduate students and advanced undergraduates in economics or quantitative geography, and for researchers who want the new economic geography and its empirical testing in one volume. Intermediate microeconomics and basic calculus and statistics are the realistic prerequisites.

A sensible order is to read "Space in Economic Thought" for context, then the chapters on monopolistic competition, trade and gravity, and the core–periphery structure, which come first in the book and underlie what follows. Then choose: the bell-shaped curve and intermediate-goods chapters for regional disparities, or the measurement and estimation chapters for empirical work. Readers coming from human geography may read the core–periphery chapter and the concluding remarks first for the argument before the algebra.