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Regular version of the site

Imperfect markets, spatial economics and industrial cluster

Priority areas of development: economics

Goal of research

We seek to obtain new results of high academic and/or practical value added in the analysis of markets exhibiting a number of features which are key for most real-world markets but which classical textbook perfect-competition model fails to capture: firm heterogeneity, consumer heterogeneity, and non-trivial spatial distributions of equilibrium variables. We also seek to apply the results of our research to open economy analysis, macroeconomic analysis, studies of retail and online-markets, socioeconomic networks, etc.


General-equilibrium models with imperfect competition, variable elasticity of substitution, heterogeneous agents, and free entry; New economic geography models, urban economics models; macro- and mocroeconometric methods; spatial econometric methods, including Duranton-Overman localization effects testing methodology.

Empirical base of research

In our research, we are using unique firm-level and plant-level datasets of manufacturing firms in Russian Federation and manufacturing plants/factories in the Russian Empire (second half of the 19th Century). Members of the Center processed part of raw data themselves, using statistical annals of the Russian Empire. Other components of the datasets stem from RUSLANA and Spark-Interfax databases.

Results of research

Our main results include, among others: a better understanding of matching and sorting of heterogeneous firms, heterogeneous consumers, and heterogeneous workers in monopolistic competition; new strong and unexpected results about non-monotone behavior of gains/losses from international trade in response to gradual reduction of trade frictions; a better understanding of spatial organization of firms; the mechanisms of how increasing returns and imperfect competition affect land price and urban structure; econometric estimates of the consequences of transfer pricing for natural resources; a better understanding of spatial structure of manufacturing clusters in Russian Federation and the Russian Empire of the 2ndhalf 19thCentury.

Level of implementation, recommendations on implementation or outcomes of the implementation of the results

The results of empirical studies of agglomeration and co-agglomeration effects in the Russian economy (see part 4 of the Research Project Report) can be used to develop informed regional economic policies fostering formation and positive externalities of manufacturing clusters and R&D clusters in the Russian economy. The results of specific market and industry studies Результаты исследований конкретных рынков и отраслей (see part 5 of the Research Project Report) potentially have commercial value in addition to their intellectual value. This research agenda could serve in the future as a starting point of developing partnerships between the Center (and HSE University as a whole) with retailing firms, geo-marketing firms, and/or consulting firms. The directions of joint work could include: joint applied research projects; using high-quality individual-level data; placement of HSE alumni, etc.


Kichko S. Competition, Land Prices, and City Size / Munich Society for the Promotion of Economic Research - CESifo. Series CESifo Working Papers. "CESifo". 2019. No. 7727. 
Gokan T., Kichko S., Thisse J. How do trade and communication costs shape the spatial organization of firms? / CESifo Group Munich. Series - "CESifo working paper". "Munich Society for the Promotion of Economic Research - CESifo". 2019. No. 7888. 
Albouy D., Behrens K., Robert-Nicoud F., Seegert N. The optimal distribution of population across cities // Journal of Urban Economics. 2019. Vol. 110. P. 102-113. doi
Gokan T., Kichko S., Thisse J. How do trade and communication costs shape the spatial organization of firms? // Journal of Urban Economics. 2019. Vol. 113. P. 1-17. doi
Behrens K., Kichko S., Ushchev P. Intersectoral linkages: Good shocks, bad outcomes? / CEPR. Series CEPR. "DP". 2019. No. DP13946. 
Koster H., van O. J. Place-Based Policies and the Housing Market // Review of Economics and Statistics. 2019. Vol. 101. No. 3. P. 400-414. doi
Koster H., Cheshire P., Hilber C. A. Regulating Vacancies Away? The Paradoxical Effects of (Mis)match in the Housing Market // Journal of Public Economics. 2019. Vol. 158. P. 126-151. 
Koster H., Ostermeijer F., van O. J. Residential parking costs and car ownership: Implications for parking policy and automated vehicles // Regional Science and Urban Economics. 2019. Vol. 77. No. 7. P. 276-288. doi
de G. J., van O. J., Koster H. The Effect of Paid Parking and Bicycle Subsidies on Employees’ Parking Demand // Transportation Research Part A: Policy and Practice. 2019. Vol. 128. P. 46-58. doi
Sandomirskaia M. Nash-2 Equilibrium: Selective Farsightedness Under Uncertain Response // Group Decision and Negotiation. 2019. Vol. 28. No. 2. P. 275-304. doi
Ushchev P., Zenou Y. Social Norms in Networks // Journal of Economic Theory. 2020. Vol. 185. P. 104969-. doi