New Economic Geography: An appraisal on the occasion of Paul Krugman's 2008 Nobel Prize in Economic Sciences ¬リニ

a r t i c l e i n f o Paul Krugman has clarified the microeconomic underpinnings of both spatial economic agglomerations and regional imbalances at national and international levels. He has achieved this with a series of remarkably original papers and books that succeed in combining imperfect competition, increasing returns, and transportation costs in new and powerful ways. Yet, not everything was brand new in New Economic Geography. To be precise, several disparate pieces of high-quality work were available in urban economics and location theory. Our purpose in this paper is to shed new light on economic geography through the lenses of these two fields of economics and regional science. Economic geography seeks to explain the riddle of unequal spatial development. The most salient feature of the spatial economy is in effect the presence of a large variety of economic agglomerations. Hundreds of books and papers have been devoted to this topic but it was not until Paul Krugman's (1991a) seminal paper that a full-fledged general equilibrium model became available to explain why, how and when the economic activity may be agglomerated in a few places. Although using " economic agglomeration " as a generic term is convenient at a certain level of abstraction, it must be kept in mind that this concept refers to very distinct real world situations. At one extreme of the spectrum lies the North–South divide. At the other extreme, agglomeration arises when restaurants, movie theaters, or shops selling similar products are clustered within the same neighborhood, not to say on the same street. What distinguishes those various types of agglomeration is the spatial scale, or the spatial unit of reference, chosen in conducting one's research, very much as there are different levels of aggregation of economic agents. Whatever the scale of analysis retained, the emergence of economic agglomeration is naturally associated with the emergence of inequalities across locations, regions or nations. Such inequalities are often at the origin of strong tensions between different political bodies or jurisdictions, or even social, religious or ethnic groups when they are geographically concentrated. Understanding how spatial inequalities in living standards arise is thus a fundamental challenge for economists and regional scientists. Paul Krugman has clarified the microeconomic underpinnings of both spatial economic agglomerations and regional imbalances at national and international levels. He has achieved this with a series of remarkably original papers and books that succeed in …