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MENTAL MODEL · M3238

Core-Periphery Model

Core-Periphery Model
BusinessmediumEconomics
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Updated 2026-08-01

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INTRODUCTION

English translation pending.

CORE DEFINITION

A model developed by Paul Krugman within new economic geography, explaining why manufacturing concentrates in a core region while surrounding areas become a periphery. Two forces compete: centripetal forces such as backward and forward linkages, labor market pooling, and economies of scale pull firms together, while centrifugal forces such as high transport costs and immobile factors push them apart. When transport costs fall below a critical level and scale economies are large, agglomeration wins and a stable core-periphery pattern emerges.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

- Regional strategy: judge whether a lagging area can hold firms or must specialize differently. - Policy targeting: find where infrastructure or incentives could shift agglomeration forces. - Market entry: locate near the core when linkages dominate, near the periphery when costs do.

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Anchor fast decisions

Firms want to locate where the market is large, and the market becomes large where firms and workers locate. This circular causation, reinforced by scale economies and low transport costs, makes concentration self-sustaining once it starts. Below a critical transport cost, the pull of backward and forward linkages exceeds the centrifugal push of congestion and immobile factors, so the core keeps growing while the periphery keeps supplying it.

MINIMUM ACTION

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Source support: Explicit

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    baike.baidu.comhttps://baike.baidu.com/item/中心-外围理论ZH · Explicit
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