Theoretical Aspects of Industry Agglomeration

Student: Berdnikova Liubov

Supervisor: Sergey Kichko

Faculty: St.Petersburg School of Economics and Management

Educational Programme: Applied Economics and Mathematical Methods (Master)

Year of Graduation: 2019

We develop a monopolistically competitive model of the open economy with agglomeration effects. We study the influence of (co)agglomeration on the equilibrium in the economy, and determine agglomertion effect on wages in the industry and the survival rate of firms in the context of the cut-off point of firms' productivity in equal and asymmetric cities. Numerically we prove positive effect of agglomeration on the economy. Thus, the paper, firstly, gives an idea of agglomeration effects as a tool to influence the survival rate of firms, and secondly, allows us to make a more in-depth analysis of the model of monopolistic competition with agglomeration effects.

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