Preference Heterogeneity and Economic Geography

New economic geography mo dels an alyze agglomeration and disp er-sion force s, w hose interaction s determ ine t he sp atial distribution o f e co-nom ic a ctiv ity. We intro d u ce c on su m ers ’ t aste d iff erences in the mo del by Ottaviano et al. (2002), and we argue that this allow s u s to represent an ad ditional sourc e of dep end ence of e q uilibrium p ric es on th e de man d prop erties shap ed by th e interregional distribution of workers. In par-ticu lar, w h e n th e int en sity of skilled workers ’ p re feren ce for the m o d e rn go o d an d its variety is strong enough, prices ch arged by fi rm s, either lo ca