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Technology, agglomeration, and regional competition for investment

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Author Info
Bruce A. Blonigen
Van Kolpin
Abstract

Competition for firms by region has a long-standing history, and the academic literature has debated whether such competition is efficient. We develop a model that explores technology development by firms facing regional competition for their investment and examine the endogenous determination of region policy, firm technology, and agglomeration externalities. We find a new source of inefficiency - regional competition leads firms to inefficiently distort their development and selection of production technology to improve their standing in the regional competition for their investment. We show that these inefficient firm decisions on technology and location can also weaken agglomeration externalities.

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File URL: http://economics.ca/cgi/xms?jab=v40n4/CJEv40n4p1149.pdf
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Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 40 (2007)
Issue (Month): 4 (November)
Pages: 1149-1167
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Handle: RePEc:cje:issued:v:40:y:2007:i:4:p:1149-1167

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Find related papers by JEL classification:
H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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This page was last updated on 2009-12-21.

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