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Location of R&D and High-Tech Production by Vertically Integrated Multinationals

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  • Ekholm, Karolina

    ()
    (Dept. of Economics, Stockholm School of Economics)

  • Hakkala, Katariina

    ()
    (Dept. of Economics, Stockholm School of Economics)

Abstract

We develop a two-country general equilibrium model where firms make separate choices about the location of R&D and high-tech production. There are two agglomeration forces: R&D spillovers and backward linkages associated with high-tech production. The latter tends to attract production to the larger economy. We show that, for relatively weak R&D spillovers and intermediate trade costs, the smaller economy tends to specialize in R&D. For certain parameterizations, both concentration and dispersion of R&D activities are possible outcomes. Hosting an agglomeration of R&D activities does not necessarily lead to welfare gains.

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Bibliographic Info

Paper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 538.

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Length: 41 pages
Date of creation: 07 Oct 2003
Date of revision:
Handle: RePEc:hhs:hastef:0538

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Keywords: monopolistic competition; R&D; high-tech production; agglomeration economies;

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  32. repec:fth:iniesr:430 is not listed on IDEAS
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Citations

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Cited by:
  1. Rachel Griffith & Gareth Macartney, 2010. "Employment protection legislation, multinational firms and innovation," IFS Working Papers W10/01, Institute for Fiscal Studies.
  2. Bandick, Roger & Görg, Holger & Karpaty, Patrik, 2011. "Foreign acquisitions, domestic multinationals, and R&D," Working Papers 2011:1, Örebro University, School of Business.
  3. Karpaty, Patrik & Tingvall, Patrik Gustavsson, 2011. "Offshoring and Home Country R&D," Working Paper Series in Economics and Institutions of Innovation 254, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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