Introduction

The core model of geographical economics was introduced and explained in chapters 3 and 4 of this book. In our analysis of various extensions and applications in chapters 5–10 we investigated relatively small modifications of the core model, usually only affecting the cost function, and thus the production structure, of the core model. This was done on purpose. Not only for didactic reasons (each time returning to the familiar territory of the core model),but also to demonstrate that (seemingly) small changes in the core model can drastically increase its applicability and have interesting and sometimes far-reaching consequences. In our discussions of these adaptations of the core model two important questions have, however, been unduly neglected. First, what are the policy implications (if any) that arise from the core model and its extensions? Or, more generally, can geographical economics be used for policy analysis? Second, now that we have come to the end of our inquiry into geographical economics, what are the strong and weak points of this approach? In other words, how should geographical economics be assessed? The closing chapter of this book therefore deals with the policy implications and with the value-added of geographical economics. The latter is, inevitably, a subjective undertaking, but it gives us the opportunity to express our own views on the advantages and disadvantages of geographical economics.

This chapter is organized as follows. In the next section, we will conduct a simple policy experiment by doing simulations with the congestion model of chapter 7 in a world of non-neutral space.