Quotation Grafeneder-Weissteiner, Theresa, Kubin, Ingrid, Prettner, Klaus, Prskawetz, Alexia, Wrzaczek, Stefan. 2015. Coping with inefficiencies in a New Economic Geography modle: The unintended consequences of policy interventions. Mathematical Social Sciences 76 S. 146-157.


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Abstract

This article introduces a social planner version of a central microfoundedNewEconomic Geography model for explicitly answering whether the symmetric equilibrium of the decentralized market economy is socially desirable. We find that savings incentives are too weak, resulting in an inefficiently low capital stock and therefore an inadequate number of product varieties. We derive the appropriate subsidy and taxation scheme to remedy these distortions. Interestingly, implementing the associated policies crucially impacts on the stability of the symmetric equilibrium and has the potential to result in unintended agglomeration processes.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal Mathematical Social Sciences
Citation Index SSCI
WU-Journal-Rating new VW-D
Language English
Title Coping with inefficiencies in a New Economic Geography modle: The unintended consequences of policy interventions
Volume 76
Year 2015
Page from 146
Page to 157
Reviewed? Y
URL http://www.sciencedirect.com/science/article/pii/S0165489615000505
DOI http://dx.doi.org/10.1016/j.mathsocsci.2015.05.003

Associations

Projects
COST Action IS1104: The EU in the new economic complex geography
Agglomeration processes in ageing societies
People
Kubin, Ingrid (Details)
External
Grafeneder-Weissteiner, Theresa (Austria)
Prettner, Klaus (Austria)
Prskawetz, Alexia (Austria)
Wrzaczek, Stefan (Austria)
Organization
Institute for International Economics and Development IN (Details)
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