The multiregional core-periphery model: The role of the spatial topology

We use the multiregional core-periphery model of the new economic geography to analyze and compare the agglomeration and dispersion forces shaping the location of economic activity for a continuum of network topologies ranging from the homogenous spacering topologyto the most extreme heterogeneous spacestar topology. Within graph theory, we define the homogenous space as that topology in which all regions have the same relative position, and the heterogeneous space as that configuration in which there are regions that have better relative positions due to locational advantages. Systematically extending the analytical tools and graphical representations of the NEG framework to the multiregional case, we calculate the critical sustain and break points for the two polar cases as well as the intermediate topologies, whose relative space heterogeneity is measured in terms of the network’s degree of centrality. We show that as the centrality of the network increases, so does the sustain and break points for those regions that are best located, and therefore can uphold and draw agglomeration to a larger extent. The examination of the alternative equilibria allows us to study new phenomena such as the absence of any stable distribution of economic activity for some range of transport costs, and the infeasibility of the dispersed equilibrium in the heterogeneous space, resulting in the introduction of the concept pseudo flat-earth as a long run-equilibrium corresponding to an uneven distribution of manufacturing activity across all regions. The results have important implications for transportation and infrastructure policies intended to promote territorial cohesion by reducing the centrality of the spatial economy and promoting a balanced distribution of economic activity.