Trade Liberalization and the Agglomeration of Heterogeneous Entrepreneurs

Toshihiro Okubo、Rikard Forslid

JEL Classification codes : F12, F15, F21, R12
[ Abstract ]

This paper introduces spatial sorting of heterogeneous entrepreneurs (firms) in the "foot-loose entrepreneur" trade and geography model. The model generates agglomeration from a uniform space contrary to the "footloose capital" model. The model also generates spatial sorting in reverse productivity order with the least productive entrepreneur being the first to relocate.