District formation: a co-opetition approach
AbstractThis paper considers a model of district formation that incorporates a notion of regional industrial systems. Each firm chooses its location from the set of existing industrial districts. The heterogeneous firms are distinguished by its "stand alone" district-dependent production and transportation cost. However, if other firms locate in the same district, the firm's stand alone cost is reduced by a factor that depends on the number of firms in the district. Thus, firms must take into account the reciprocal nature of cost-reduction as by joining a district, they engage in tacit cooperation: the firms reduce their own costs but in the same time reduce the costs of their rivals. We show that under quite general assumptions this co-opetition game that contains the elements of competition and cooperation, yields a subgame perfect equilibrium for any number of firms and districts. We characterize both "agglomeration" equilibria, where all firms locate in the same district, and "dispersed" equilibria, where firms locate in different districts. We show that a dispersed equilibrium can emerge only if firms' and districts' characteristics possess a sufficient degree of heterogeneity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2001016.
Date of creation: 00 Mar 2001
Date of revision:
Contact details of provider:
Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
industrial districts; cost reduction factor; agglomeration and dispersed equilibria;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- SOUBEYRAN, Antoine & THISSE, Jacques-François, .
"Learning-by-doing and the development of industrial districts,"
CORE Discussion Papers RP
-1366, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Soubeyran, Antoine & Thisse, Jacques-Francois, 1999. "Learning-by-Doing and the Development of Industrial Districts," Journal of Urban Economics, Elsevier, vol. 45(1), pages 156-176, January.
- Soubeyran, A. & Thisse, J.-F., 1998. "Learning-by-Doing and the Development of Industrial Districts," G.R.E.Q.A.M. 98a26, Universite Aix-Marseille III.
- Belleflamme, Paul & Picard, Pierre & Thisse, Jacques-Francois, 2000.
"An Economic Theory of Regional Clusters,"
Journal of Urban Economics,
Elsevier, vol. 48(1), pages 158-184, July.
- Long, N.V. & Soubeyran, A., 1998.
"Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem,"
98a25, Universite Aix-Marseille III.
- Van Long, N. & Soubeyran, A., 1997. "Cost Manipulation in an Asymmetric Oligopoly: The Taxation Problem," ASSET - Instituto De Economia Publica 173, ASSET (Association of Southern European Economic Theorists).
- Bernheim, B. Douglas & Peleg, Bezalel & Whinston, Michael D., 1987. "Coalition-Proof Nash Equilibria I. Concepts," Journal of Economic Theory, Elsevier, vol. 42(1), pages 1-12, June.
- Ngo Van Long & Antoine Soubeyran, 1999.
"Cost Manipulation Games in Oligopoly, with Costs of Manipulating,"
CIRANO Working Papers
- Long, Ngo Van & Soubeyran, Antoine, 2001. "Cost Manipulation Games in Oligopoly, with Costs of Manipulating," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 42(2), pages 505-33, May.
- Slade, M.E., 1989.
"What Does An Oligopoly Maximize?,"
89a14, Universite Aix-Marseille III.
- Konishi, Hideo & Le Breton, Michel & Weber, Shlomo, 1997. "Pure Strategy Nash Equilibrium in a Group Formation Game with Positive Externalities," Games and Economic Behavior, Elsevier, vol. 21(1-2), pages 161-182, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alain GILLIS).
If references are entirely missing, you can add them using this form.