Multiple growth and urbanization patterns in an endogenous growth model with spatial agglomeration

This paper presents a model which integrates an economic geography model with an endogenous growth model and examines how the specialization pattern and global economic growth rate are determined in an economy with decreasing transaction costs. If transaction costs decrease slowly and the agglomeration process has not yet been completed, economic activities tend to agglomerate in the region with large land mass and a high growth rate will be attained. On the other hand, a sharp decrease in transaction costs can lead to agglomeration in a region with a paucity of land. In this case, the further decrease in transaction costs decreases the global economic growth rate. (c) 2004 Elsevier B.V. All rights reserved.