Localized technological externalities and the geographical distribution of firms

Arbeitspapier

Using an analytically solvable equilibrium model, we study how the distribution of economic activities is affected by the trade-off between pecuniary externalities, as dependent on transportation costs, and localized technological externalities, as dependent on inter-regional spillovers. We model localized technological externalities as having a cost saving effect that can be interpreted both as a tangible technological advantage, like the presence of a stronger industrial infrastructure, and as an intangible advantage, like a more efficient labour force composition or the presence of some inter-firms knowledge spillover. Under the assumption of capital mobility and labour immobility, we show that whereas decreasing transportation costs, i.e. promoting market openness, leads to sudden agglomeration, increasing inter-regional spillovers, i.e. promoting technological openness, favors a smoother transition between different levels of firms concentration and ultimately leads to a less uneven distribution of welfare.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: LEM Working Paper Series ; No. 2008/11

Classification and Topics

• Classification: Wirtschaft ; Models of Trade with Imperfect Competition and Scale Economies; Fragmentation ; Economic Integration ; Size and Spatial Distributions of Regional Economic Activity
• Subject: New Economic Geography ; Agglomeration ; Footloose capital models ; Technological externalities ; Market and technological openness ; Industriegeographie ; Wirtschaftsgeographie ; Agglomerationseffekt ; Raumwirtschaftstheorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bottazzi, Giulio ; Dindo, Pietro
• Event: Veröffentlichung
• (who): Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM)
• (where): Pisa
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/89330
• Last update: 10.03.2025, 11:41 AM CET