“Agglomeration in a Core-Periphery Model with Vertically and Horizontally Integrated Firms”. We

This paper analyses the effect on agglomeration tendencies of allowing multi-region firms in a standard trade and location model, the core-periphery (CP) model developed by Krugman (1991). The introduction of horizontal multi-region firms dampens the agglomeration effects found in the CP model by reducing the range of trade costs for which the core-periphery equilibrium occurs. The introduction of vertical multi-region firms that separate the location of headquarters and plants has two counteracting effects. While headquarters exhibit a strong tendency to concentrate, plants tend to spread out. The equilibrium is always asymmetric in spite of the underlying symmetry of the model