Port-cities and agglomeration economies in the portuguese economy : a game theoretic view

• Autor(a) principal: Pontes, José Pedro
• Data de Publicação: 1991
• Outros Autores: Santos, Vitor M.
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.5/22607
• topic: Coastline; Cities; Industrial firms; Industrial Localization; Agglomeration Economies; Portugal

The core of the Portuguese economy is formed by two port-cities, Lisbon and Oporto, whose metropolitan areas are connected by a strip of coastline. In this bicentric system, each port pulls business firms towards its location, while transaction costs and agglomeration economies explain intermediate locations. The main question addressed by this paper is the analysis of the location pattern of industrial firms assuming that each firm bears not only transport cost related to imported inputs but also communication or transaction costs with other firms and consumers distributed along the coastline. Our main conclusions are as follows. Strong agglomeration forces exist with relation to Lisbon because it is both a port and a capital city. However, the locational advantage of Lisbon has two restrictions: the existence of a balanced distribution of population between the two port-cities and costs of communication among firms which are higher than the costs of communication with consumers. On the other hand, Oporto is a Nash equilibrium without any restriction provided that it is slightly more populated than the capital city. This same reason explains the existence of Nash equilibria in the neighborhood of Oporto . The Centre-North of Portugal is also a candidate for joint location since it was demonstrated that local Nash equilibria can be defined in this space. However, neither local nor Nash equilibria were identified in the space corresponding to the Centre-South of the country. These results suggest that while the pattern of location in the Centre-North has a tendency to be more dispersed around Oporto, the concentration in Lisbon is the most suitable configuration for industrial location in the Centre-South.