Agglomeration dynamics and first nature asymmetries

The standard footloose capital (FC) model, as well as the discrete time version, assumes that all capital units are internationally mobile between two regions. In this paper, we assume that in one of the two regions some of the blue prints/capital units may be immobile because their utilization requires some locally specific natural resource (first nature advantage). Mobile blue prints, instead, can be utilized in both regions. We focus on this asymmetric distribution of immobile firms/capital units, labeled first nature firms. The central question of our paper is how the existence of first nature asymmetry affects agglomerative processes framed in discrete time. This modification of the FC model leads to a one-dimensional piecewise smooth map for which we show analytically that border collision bifurcations are pervasive and (even asymmetric) multistability is possible.