Abstract
This paper examines the evolution of New Economic Geography (NEG) as a sequel to New Trade Theory. The focus is on the contributions and methodological self-reflections of Paul Krugman, who started both the NTT and the NEG. His approach is characterized as “MIT programme”, a combination of Samuelson’s imperative of modelling economic problems in minimalistic frameworks of constrained optimization with Krugman’s own rules for building pathbreaking models. This paper compares the actual achievements of the NEG with the demands of the MIT programme. It is argued that the extension of trade theory to geographical economics has widened the scope of analysis of economic interaction between different countries (or regions), but that the NEG still has some way to go in exploring the role of space. Transport costs have mostly been introduced in an ad-hoc fashion, but there are first attempts to endogenize them in terms of market prices for trade services.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
