| New economic geography theory developed in the past decade still faces many challenges on both theoretical and empirical fronts. This dissertation presents three essays in new economic geography, contributing to the literature on both fronts.; In the first chapter, a computable general equilibrium model is developed based on the new economic geography theory. Solutions to the prototype model exhibit features resembling the real economy in its equilibrium spatial structure as well as the dynamic process toward its equilibrium. The model can be modified to answer questions in both regional and international economics.; Chapter 2 presents a study on the empirical relevance of new economic geography theory relative to the traditional urban economics models based on external economies of scale. By comparing the theoretical spatial distribution generated by both theoretical models against the U.S. county data, I show that in order to match the observed degree of population distribution, the required wage premium in agglomerated regions must be unrealistically high for the urban economics model. In contrast, the new economic geography model can match the degree of population agglomeration as well as regional wage distribution with reasonable model parameters.; Chapter 3 is a theoretical study on the role of the preference for variety in shaping economic landscape. It shows that, contrary to what many economists believe a strong preference for variety can work against agglomeration. In particular, if substitutability among consumption goods changes in time, it can result in a pattern of rise and fall in regional income inequality. |
