Multidimensional Core-peripheral Model

Marcus Gumpert
European Research Studies Journal, Volume XXII, Issue 1, 192-208, 2019
DOI: 10.35808/ersj/1418


The following article analyzes why an extension of the core-peripheral model is necessary for realistic economic use. The starting point is the core-peripheral model from Krugman. Various modifications are then made to make the Krugman model more robust, growth-oriented, and realistic. The models by Ricardian, Heckscher-Ohlin, Krugman, and Solow are combined by the author. This new model provides a general explanation model that is advantageous for the most diverse analyses that is, from rigid to dynamic, and growth theory-oriented model frameworks. The Ricardian model provides an immobile factor of work, perfect competition, distribution-free productions, comparative cost advantages, and constant economies of scale. The Heckscher-Ohlin theorem provides a second mobile input factor capital and production functions according to the equipment of the regions. The core-peripheral model provides aspects of monopolistic competition, cost functions, transportation costs, and spatial distribution. Depreciation rates, investment rates, and savings rates are taken over from the Solow model. We define the following parameters in the new model variant: reasons for model expansion, input factors, technology components, transportation costs, investment rate, savings rate, outputs, number of business/distribution, cost functions, consumer benefits, goods prices, wages, returns, and incomes.

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