DISPERSION FORMS: AN INTERACTION OF MARKET ACCESS, COMPETITION, AND URBAN COSTS*

ABSTRACT This paper analyzes a two‐region model including multiple industries with different transport costs. Two results are derived. First, dispersion occurs for small transport costs, but the specific dispersion patterns depend on the level of urban costs. This results from an interaction of the market‐access effect on consumers, the market‐access effect on firms, the competition effect, and the urban‐cost effect. Second, decreasing transport cost tends to let industries with lower transport costs disperse, although the shares of industries locating in the larger region are not in order of their transport costs. We further provide some empirical data concerning the second result.