Towards a NEG multiregional framework: Comparing Alternative Modelling Strategies

This article reviews the New Economic Geography (NEG) models that explain the uneven distribution of economic activity across space employing endogenous agglomeration processes, and the interplay of agglomeration and dispersion forces. Unlike the two-region models that have a restricted applicability, this article focuses on the multiregional NEG models recently developed in the literature, reviews their contributions systematically and compares different modelling strategies. As a unifying framework, we adopt the footloose entrepreneur model considering the role and nature of transport costs, and the welfare properties of the spatial equilibria and the design of optimal economic policies.