Thierry Paul
Affiliated member
,
Aix-Marseille Université
, Faculté d'économie et de gestion (FEG)
, (on secondment - ESRI des Hauts-de-France)
- Status
- Professor
- Research domain(s)
- International economics and economic geography
- Contact
- thierry.paul[at]univ-amu.fr
Larry Karp, Thierry Paul, Environment and Development Economics, Vol. 24, No. 6, pp. 624-642, 12/2019
Abstract
In familiar models, a decrease in the friction facing mobile factors (e.g., lowering their adjustment costs) increases a coordination problem, leading to more circumstances where there are multiple equilibria. We show that a decrease in friction can decrease coordination problems when a production externality arises from a changing stock, e.g. of pollution or knowledge. In general, the relation between the amount of friction that mobile factors face and the likelihood of multiple equilibria is non-monotonic.
Keywords
Costs of adjustment, Multiple equilibria, Factor reallocation, Intersectoral migration, Learning-by-doing, Coordination games, Cross-sectoral pollution