Dynamics of a developing economy with a remote region: Agglomeration, trade integration and trade patterns

We consider a three-region developing economy with poor transport infrastructures. Two models are related to different stages of development: in the first all regions are autarkic; in the second two of the regions begin to integrate with the third region still not accessible to trade. The properties of the two models are studied also considering the interplay between industry location and trade patterns. Dynamics of these models are described by two-dimensional piecewise smooth maps, characterized by multistability and complex bifurcation structure of the parameter space. We obtain analytical results related to stability of various fixed points and illustrate several bifurcation structures by means of two-dimensional bifurcation diagrams and basins of coexisting attractors.