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New Economic Geography for Low Density Places : Insights from Kaldor and Lancaster

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  • This symposium has touched on rural capital in all its varieties and on the usefulness of understanding land allocation. Castle and Oakerson pointed out that rural capital has "important time and space specificities," i.e., it varies widely. A point made by Jim Hite is that Von Thunen's nineteenth century model of rural land use remains useful and applicable to day. The model, however, takes the location of urban ag­glomerations of population and industry as exogenously predetermined. The evolution of the new economic geography explains positive feedback and local growth as being driven by preferences for variety, and how the locations of urban agglomerations are endogenously determined. Most new economic geography models, however, are suitable only for modeling urban, rather than rural, economic development. Nevertheless, students of rural development should not dwell on the pessimistic implica­tions that low density places dependent on immobile natural resource in­dustries can never grow. New economic geography models that operationalize Kaldor's (1935) and Lancaster's (1979) critiques of monopo­listic competition are suitable for modeling and do predict how rural economic development might be obtained.
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  • The author thanks Profs. Dean Hanink, Gordon Mulligan, and the participants at the NSF-sponsored conference "Analytical Economic Geography and Regional Change" in Storrs, CT, March 23-24, 1998.