International Factor Mobility and Dynamic Paths ()
Abstract
The aim of this paper is to consider the adjustment process of the
spatial structure in a two-country economy where both labor and capital are
mobile. For this purpose, we combine the model of New Economic Geography with
the phase diagram technique. We show that the agglomeration processes are not
always monotonic since the mobile factors interact with each other. More
specifically, even when both factors are eventually agglomerated to one country, it
is possible that labor and capital move in opposite directions in the
adjustment process. Differences in factor endowment ratio and market size play
significant roles in this transition path.
Share and Cite:
H. Goto and Y. Matsuoka, "International Factor Mobility and Dynamic Paths,"
Theoretical Economics Letters, Vol. 3 No. 6, 2013, pp. 302-305. doi:
10.4236/tel.2013.36051.
Conflicts of Interest
The authors declare no conflicts of interest.
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