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The International Division of Industries: Clustering and Comparative Advantage in a Multi-Industry Model

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Venables, Anthony J.

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Abstract

We consider a model with a continuum of industries in which agglomeration forces cause each industry to concentrate in a single country. We study the division of industries between countries and show that this division is not unique, so that even with identical countries and symmetric industries the number of industries in each country need not be equal. Unequal divisions are sustainable as equilibria, even though they imply different wages in the two countries, and we find the bounds on the set of equilibrium divisions. With Ricardian differences in technology, there are equilibria in which industries operate in the country in which they have a comparative disadvantage. In both cases, a country may gain by using policy to grab a higher proportion of world industry.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 1961.

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Date of creation: Aug 1998
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Handle: RePEc:cpr:ceprdp:1961

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Related research
Keywords: Agglomeration; Comparative Advantage; industrial clustering;

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Find related papers by JEL classification:
F10 - International Economics - - Trade - - - General
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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  2. Tabuchi, Takatoshi & Thisse, Jacques-François, 2002. "Regional Specialization and Transport Costs," CEPR Discussion Papers 3542, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  3. Puga, Diego, 2001. "European Regional Policies in Light of Recent Location Theories," CEPR Discussion Papers 2767, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. Souleymane Coulibaly, 2004. "Evolving Cityscapes: Agglomeration and Specialization with Mobile Labor and Vertical Linkages," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.17, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
  5. Paolo Epifani, 2001. "Heckscher-Ohlin and Agglomeration," CESPRI Working Papers 126, CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy, revised Dec 2001. [Downloadable!]
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  6. Takatoshi Tabuchi & Jacques-Francois Thisse, 2003. "Regional Specialization, Urban Hierarchy, and Commuting Costs," CIRJE F-Series CIRJE-F-223, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
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  7. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE. [Downloadable!]
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