Market potential, increasing returns and geographic concentration

Urban Concentration: The Role of Increasing Returns and Transport Costs

Very large urban centers are a conspicuous feature of many developing economies, yet the subject of the size distribution of cities (as opposed to such issues as rural-urban migration) has been neglected by development economists. This article argues that some important insights into urban concentration, especially the tendency of some developing countries to have very large primate cities, can...

Collusive Market Structure Under Learning-By-Doing and Increasing Returns

Increasing market efficiency: Evolution of cross-correlations of stock returns

We analyse the temporal changes in the cross correlations of returns on the New York Stock Exchange. We show that lead-lag relationships between daily returns of stocks vanished in less than twenty years. We have found that even for high frequency data the asymmetry of time dependent cross-correlation functions has a decreasing tendency, the position of their peaks are shifted towards the origi...

“Slimming” of power law tails by increasing market returns

We introduce a simple generalization of rational bubble models which removes the fundamental problem discovered by [20] that the distribution of returns is a power law with exponent less than 1, in contradiction with empirical data. The idea is that the price fluctuations associated with bubbles must on average grow with the mean market return r. When r is larger than the discount rate rδ , the...

Increasing Returns and Economic Efficiency

This paper argues that, from the viewpoint of Pareto optimality, the industries with increasing returns are under-expanded relative to those without increasing returns and those with higher degrees of increasing returns are under-expanded relative to those with lower degrees. Ignoring administrative and indirect (such as rent-seeking) costs, subsidies on goods produced under conditions of (high...