The Study of New Economic Geography of Krugman and Its Significance

  • 1. Nanjing Institute of Geography & Limnology; CAS; Nanjing 210008; China; 
    2. Institute of Geographic Sciences and Natural Resources Research; CAS; Beijing 100101; China; 
    3. Universitaet Koeln; Germany

Received date: 2009-06-12

  Revised date: 2009-10-08

  Online published: 2010-02-25

Supported by

National Natural Science Foundation of China,No. 40671077 & 40571058


By the reference and creation of the predecessors\' theory, Paul Krugman introduces the achievements of New Trade and New Growth Theory into the traditional location theory, and puts forward a new location theory which is called New Economic Geography. Based on this theory and his achievements in the New Trade Theory, Krugman won the Nobel Prize in 2008. Krugman defined the New Economic Geography as the location theory of production, just as the concept of the classical location theory, which is proposed to explain the mechanism of formation and evolution of the economic spatial structure. The New Economic Geography theory of Krugman, scattered in his several books, is summed up as follows: a main idea, four propositions, four tools and three models. Krugman\'s new Economic Geography is based on the main idea that there exists multiple equilibrium state in the development of economic spatial structure. In order to analyze more clearly the process of formation and evolution of economic spatial structure, Krugman puts forward four propositions: (1) Transportation Costs play a key role in international trade and inter-regional trade; (2) Spatial agglomeration of interrelated economic activity could achieve cost-saving and benefit-increasing; (3) The cost-saving and benefit-increasing from the economic spatial agglomeration could promote the further concentration of economic development; (4) Early-development advantage could lead to the long-term accumulation of economic activity. Furthermore, Krugman introduces D-S Monopolistic Competition Model (built by A. Dixit and J. Stiglitz), "Iceberg"-type Transportation Costs, Self-organization Simulation and Computer Technology into the new Economic Geography, and builds three models, i.e., the Core-Periphery Model, Urban System Model and the International Model. The New Economic Theory of Krugman is a new development of Economic Geography under new situation, which can deal with the difficult problem in economic location study which has not been solved by traditional Economic Geography. But for a long time, the New Economic Theory of Krugman was considered a new academic field which is differentiated from or opposed to the classical Economic Geography in geographical circle. Therefore, this theory has attracted relatively little attention from the researchers in Geography. From the angle of geographic view, the paper reinterprets the theoretical connotation, significance of the New Economic Geography of Krugman and elaborates its relation with traditional location theory, analyses its effects on the development of Economic Geography, and hopes to provide the reference and consultation for innovation of the research paradigm of the Economic Geography in China and drafting of the long-term research program in regional development fields.

Cite this article

DUAN Xuejun1; YU Xiaogan1; LU Dadao2; Josef Nipper3 . The Study of New Economic Geography of Krugman and Its Significance[J]. Acta Geographica Sinica, 2010 , 65(2) : 131 -138 . DOI: 10.11821/xb201002001


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