Technology Spillover,Transaction Cost and New Equilibrium of Economic Geography:A New Extension of the Krugman's Core-Peripheral Model
The developing new economic geography model believes that fixed cost is no longer an exogenous vari-able,but an endogenous variable related to technology spillover.Enterprises gain more benefits by reducing fixed pro-duction costs due to the positive externalities of technology spillovers.The developing new economic geography model is a new extension of the Krugman's core-peripheral model.Compared with the original core-periphery model,the distinctive research conclusions drawn in this article mainly include:the enhancement of local technology spillover effect can promote industrial agglomeration,while increase of cross-boundary technology spillover effect contributes to the spatial decentralization of industries.Compared with the original core-periphery model,technology spillover leads to a narrower range of trade freedom with a symmetric structure in stable equilibrium while a wider one of trade freedom as for core-periphery structures in stable equilibrium;when trade freedom becomes greater,local technology spillover effect becomes stronger or cross-boundary technology spillover effect becomes more modest,market conges-tion effects may not exist.At this point,it transforms into driving forces for promoting industrial agglomeration;the breakthrough point can be either smaller than,equal to,or bigger than the duration point.Therefore,along with the changes of trade freedom,the evolution of industrial spatial structure can not only demonstrate sudden changes,but also gradual changes.The hump-shaped agglomeration rent curve exists,and even under the conditions of full trade freedom,agglomeration rent does not disappear.
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