Agglomeration under Forward-Looking Expectations: Potentials and Global Stability∗ Daisuke Oyama Graduate School of Economics, Hitotsubashi University; and Paris School of Economics Naka 2-1, Kunitachi, Tokyo 186-8601, Japan
[email protected] March 28, 2006; revised May 14, 2009 ∗Earlier versions of this paper were circulated under the title “Potential Methods in a Core-Periphery Model with Forward-Looking Expectations”. I would like to thank Josef Hofbauer, Takatoshi Tabuchi, and Jacques-Fran¸coisThisse for valuable discussions and suggestions. I am also grateful to Richard E. Baldwin, Taiji Furusawa, Hiroki Kondo, Pascal Mossay, Yasusada Murata, Yoshimasa Shirai, Kazuhiro Yamamoto, and two anony- mous referees for their comments. The paper has been presented at Hitotsubashi Univer- sity, Hokkaido University, Keio University, Kyoto University, Nihon University, Toyama University, University of Tokyo, the 2006 Spring Seminar on Analysis and Design of Eco- nomic Systems at Kyushu University, the 2006 Autumn Meeting of the Japanese Economic Association at Osaka City University, the 20th Annual Meeting of the Applied Regional Science Conference at Hiroshima University, Hitotsubashi COE/RES Conference on Inter- national Trade and FDI 2006 at Hitotsubashi University, SWET 2007 at Hokkaido Univer- sity, and the 22nd Annual Congress of the European Economic Association in Budapest. This work builds upon research supported by Grant-in-Aid for JSPS Fellows. Support by JSPS Grant-in-Aid for Young Scientists (B) is also acknowledged. Web page: www.econ.hit-u.ac.jp/˜oyama/papers/potCP.html. Abstract This paper considers a class of migration dynamics with forward- looking agents in a multi-country solvable variant of the core-periphery model of Krugman (Journal of Political Economy 99 (1991)).