Equilibrium Locations of Vertically Linked Industries
AbstractThere are two imperfectly competitive industries, upstream and downstream, and two locations. Where do the industries locate? Production occurs in both locations when transport costs are high (industry must be close to consumers) or low (factor prices determine location). Imperfect competition and transport costs create forward and backward linkages between upstream and downstream industries, and at intermediate transport costs these linkages determine location. There are multiple equilibria, some with agglomeration in a single location. Reducing transport costs from high to intermediate causes agglomeration and divergence of economic structure and income; further reductions may undermine the agglomeration, bringing convergence. Copyright 1996 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
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Bibliographic InfoArticle provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.
Volume (Year): 37 (1996)
Issue (Month): 2 (May)
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Web page: http://www.econ.upenn.edu/ier
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Other versions of this item:
- Anthony J. Venables, 1993. "Equilibrium Locations of Vertically Linked Industries," CEP Discussion Papers dp0137, Centre for Economic Performance, LSE.
- Venables, Anthony J., 1993. "Equilibrium Locations of Vertically Linked Industries," CEPR Discussion Papers 802, C.E.P.R. Discussion Papers.
- F1 - International Economics - - Trade
- F10 - International Economics - - Trade - - - General
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
- R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
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