Non-linear dynamics and self-organization - New Economic Geography

Abstract

Models dealing with economic geography have only had a resurgence since the beginning of the 90`s. These models — often subsumed under the title of New Economic Geography - emphasize that economic space is structured by the distribution of mobile and immobile economic agents and their activities. Still all approaches rest on the assumption that agents’ maximization of profits or utilities is the basis for their locational decisions. Agents are assumed to be completely informed about all relevant market parameters and their decisions are reversible, so that there are marginal possibilities of locational adaptation. There is an optimal spatial distribution for any agent which depends on the values of certain parameters like e. g. transport costs. As the approaches are based on market structures of monopolistic competition, assumptions about structures of interaction are relatively rigid and purely based on market mechanisms.