1991 Fiscal Year Final Research Report Summary
The Analysis of Prices and Employment in the Regional Economy
| Project/Area Number |
01530031
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| Research Category |
Grant-in-Aid for General Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Research Field |
経済事情及び政策学
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| Research Institution | Aoyama-Gakuin University |
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Principal Investigator |
NAKAGOME Masaki Aoyama-Gakuin University, Department of Economics, Professor, 経済学部, 教授 (30137020)
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| Co-Investigator(Kenkyū-buntansha) |
MATSUSHITA Masahiro Aoyama-Gakuin University, Department of Economics, Professor, 経済学部, 教授 (20024961)
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| Project Period (FY) |
1989 – 1991
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| Keywords | economic space / microeconomic theory / regional economy / urban areas / imperfect competition / price rigidity / market structure / labor market |
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| Research Abstract |
The importance of economic space has not been recognized in the traditional microeconomic theory. This neglect of economic space entails enormous opportunity costs. The effects of imperfect competition and that of the structure of spatial markets on the equilibrium have not been intensively studied in formal models.
This paper investigates the relationship between the spatial equilibrium and the structure of regional markets. We consider a formal model incorporating competitive as well as imperfectly competitive markets into it. These different types of spatial markets are substitutable, and the relative importancesbetween the markets are endogenously determined in the regional equilibrium. Consumers and firms- can choose markets where they sell or purchase products in order to maximize their profits. Relative price rigidity depends on the location of firms as well as that of consumers. By formulating a general equilibrium model with product and labor markets in urban areas, we derive new economic implications for regional policies. It is worth noting that the effects of regional policies on prices and employment are sharply different from those of macroeconomic policies. In order to conduct regional policies successfully, the usual results about macroeconomic theory should not be easily extended to the spatial setting.
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