ANALYSIS OF URBAN SYSTEMS’ ABSORPTIVE CAPACITY TO TOLERATE EMIGRATION USING A NEW ECONOMIC GEOGRAPHY MODEL

Abstract

 Migration caused by an external force such as a natural disaster and war can make a sustained city slip into decline. This paper defines Absorptive capacity as the ability of an urban system to tolerate the emigration generated by an external force and recover its previous condition. The paper establishes a two-city small open model based on New Economic Geography to show the following characteristics of urban systems’ Absorptive capacities. First, the high freeness of trade leads to an enhancement of both cities’ Absorptive capacities. Second, the high convenience of inner-city traffic in one city increases not only the city’s Absorptive capacity but also the other city’s capacity. Finally, the high productivity of industry in one city results in an improvement of the city’s Absorptive capacity but causes a reduction of the other city’s capacity.