Paper #: 97-06-055
The paper discusses the role of self-organizing phenomena like emergence of infrastructure and self-organizing criticality in a spatial economy. Some theoretical models are discussed and reviewed. Computer models in the form of simple cellular automata, similar to the game “Life” and Schelling’s segregation model, are discussed. It is shown that in the framework of increasing returns to scale and transport costs there is a trade-off between optimality and robustness. The economic system tends to evolve in the direction of bigger plants with higher profitability, but becomes very vulnerable to external shocks in transport costs.