This paper investigates circumstances where a region loses its technological leadership after some major technological breakthrough. Input-output linkages between firms in a Cournot upstream industry and a perfectly competitive downstream industry create forces for agglomeration in particular locations, driving up prices of immobile factors. A new superior technology, incompatible with the old, will not benefit from these linkages, so is more likely to be established in locations with little existing industry due to lower factor prices. Furthermore, it is possible that the old and new technologies can coexist.
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Paper provided by La Trobe - Department of Economics in its series Papers with number
90-14.
Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F17 - International Economics - - Trade - - - Trade Forecasting and Simulation O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
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