Which of the following is a characteristic of the 'New Economic Geography' associated with Paul Krugman?
A. It ignores agglomeration forces
B. It assumes constant returns and no transport costs
C. It focuses only on comparative advantage
D. It explains the spatial concentration of economic activity through increasing returns and transport costs
Answer: Option D
Solution (By JKSSB Mock Tests)
New Economic Geography models show how increasing returns, transport costs and factor mobility can lead to the endogenous agglomeration of economic activity in particular locations.
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