Agglomeration and Trade Revisited

The purpose of this paper is twofold. First, we present a new model of agglomeration and trade that displays the main features of the recent economic geography literature while allowing for the derivation of analytical results by means of simple algebra. Second, we show how this framework can be used to in the context of a forward-looking approach to the dynamics of migration in the process of agglomeration instead of the simple Marshallian model used so far in the economic geography literature.