Consumption Pattern And Spatial Agglomeration-a Swarm Simulation Study

For a long time, main-stream economics has ignored the study of spatial economic activities. Spatial impossibility theorem shows that classical economics can not make satisfactory explanation on spatial economic activities, for it is based on constant returns and perfect competition assumptions. To explain them, increasing returns must be assumed. It's just based on this that Paul Krugman proposed the new geography economy analysis framework in the early 90's. In this framework, economic agglomeration on different spatial scales can be studied.Consumption has always been an essential consideration in economic analysis. However, most research before did not consider the relationship between consumption pattern and spatial economic activities, especially those related to goods producers. In economy reality, consumption pattern has important influence on producers' spatial distribution. Although Krugman's analysis framework provides a well-established model to consider spatial economic problems, its assumptions are strict. Consumers do not have homogenous preferences. For different exogenous reasons, consumers have heterogeneous preferences and they are expected to allocate their income on goods differently. Heterogeneous preferences will endogenously influence the spatial distribution of economic activities, and thus different conclusions can be drawn from the extended core-periphery model. The research in this paper attempts to relax the core-periphery model's homogenous consumer assumption and investigate the relationship between consumption pattern and spatial industrial agglomeration.The essential part of the original core-periphery model is a non-linear economic system that is constituted by non-linear equations. Iterative computation can easily solve the equations system. However, introduction of heterogeneous consumers requires consideration of individual consumers in micro ways and results can't be obtained as in the study of original core-periphery model. The Swarm simulation tool provides us with a way to control all individual consumers along the time path, and observe the emergent macro economic activities. In this research, empirical methods are adopted and mathematical analysis models and Swarm simulation are utilized to discuss the extended core-periphery model.Analysis in this paper reveals that although history has important influenceon spatial industrial distribution, it does not demonstrate itself by multiple equilibriums because of median transportation cost. Moreover, the evolution of consumption pattern has important impact on spatial industrial distribution. This paper also explores the ACE research method in spatial economics research and testifies propositions drawn out from the original and extended core-periphery models with Swarm simulation.