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How Industries Migrate When Agglomeration Economies Are Important

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  • Holmes, Thomas J.

Abstract

The Economics of QWERTY suggests that historical accidents can trap economies in inefficient equilibria. This paper suggests that such accidents do not have the force that proponents claim. The paper presents a mechanism that may unravel a locational advantage caused by an historical accident. In the model, there are agglomeration benefits from concentrating industry in a particular location because it enables a large variety of local suppliers to emerge. Firms differ by the extent to which they purchase from local suppliers. Low-tier firms purchase little; high-tier firms purchase more. When the industry migrates, the lowest-tier products move first.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 45 (1999)
Issue (Month): 2 (March)
Pages: 240-263

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Handle: RePEc:eee:juecon:v:45:y:1999:i:2:p:240-263

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Web page: http://www.elsevier.com/locate/inca/622905

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Citations

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Cited by:
  1. Johannes Van Biesebroeck, 2008. "Bidding for Investment Projects: Smart Public Policy or Corporate Welfare?," Working Papers tecipa-344, University of Toronto, Department of Economics.
  2. Kai A. Konrad & Dan Kovenoch, 2009. "Competition for FDI with vintage investment and agglomeration advantages," Working Papers 2009/18, Institut d'Economia de Barcelona (IEB).
  3. Thomas J. Holmes, 1996. "Step-by-step migration to efficient agglomerations," Staff Report 221, Federal Reserve Bank of Minneapolis.
  4. Thomas Holmes, 2004. "EconomicDynamics Interviews Thomas Holmes on Dynamic Economic Geography," EconomicDynamics Newsletter, Review of Economic Dynamics, vol. 6(1), November.
  5. Konishi, Hideo, 2000. "Formation of Hub Cities: Transportation Cost Advantage and Population Agglomeration," Journal of Urban Economics, Elsevier, vol. 48(1), pages 1-28, July.
  6. Barrios, Salvador & Bertinelli, Luisito & Strobl, Eric & Teixeira, Antonio Carlos, 2004. "The dynamics of Agglomeration: Evidence from Ireland and Portugal," MPRA Paper 5706, University Library of Munich, Germany.
  7. J. Vernon Henderson, Zmarak Shalizi, and Anthony J. Venables, 2001. "Geography and development," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 81-105, January.
  8. Thomas J. Holmes, 2004. "Step-by-step Migrations," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 52-68, January.

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