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R&D and Strategic Industrial Location in International Oligopolies

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Garcia Pires, Armando José

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Abstract

In a spatial economy where oligopolist firms compete in R&D, it is found that geography affects the innovative behaviour of firms. Notably, international differences in market size conduce to endogenous asymmetries between firms given that firms located in the country with more demand have stronger incentives to invest in R&D. This 'R&D linkage' between demand and competitiveness promotes firms to strategically delocalize to the larger country. As a result, a spatial equilibrium arises with only total or partial agglomeration, but never with symmetric dispersion.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5582.

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Date of creation: Mar 2006
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Handle: RePEc:cpr:ceprdp:5582

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Related research
Keywords: agglomeration effects asymmetric firms industrial location oligopoly R&D investment

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Find related papers by JEL classification:
F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
O31 - Economic Development, Technological Change, and Growth - - Technological Change - - - Innovation and Invention: Processes and Incentives
R3 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location

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