Agglomeration, Vertical Specialization, and the Strength of Industrial Linkages
AbstractThis paper picks up the seminal model of Venables (1996) and provides a quantifying concept for the sectoral coherence in vertical-linkage models of the New Economic Geography. Based upon an alternative approach to solve the model and to determine critical trade cost values, this paper focuses on the interdependencies between agglomeration, specialization and the strength of vertical linkages. A central concern is the idea of an ’industrial base,’ which is attracting linked industries but is persistent to relocation. As a main finding, the intermediate cost share and substitution elasticity basically determine the strength of linkages. Thus, these parameters affect how strong the industrial base responds to changes in trade costs, relative wages and market size.
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Bibliographic InfoPaper provided by University of Lüneburg, Institute of Economics in its series Working Paper Series in Economics with number 98.
Length: 44 pages
Date of creation: Sep 2008
Date of revision:
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Web page: http://leuphana.de/institute/ivwl.html
New Economic Geography; Vertical Linkages;
Other versions of this item:
- Jan Kranich, 2011. "Agglomeration, vertical specialization, and the strength of industrial linkages," Papers in Regional Science, Wiley Blackwell, vol. 90(1), pages 159-178, 03.
- F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-09-20 (All new papers)
- NEP-GEO-2008-09-20 (Economic Geography)
- NEP-INT-2008-09-20 (International Trade)
- NEP-URE-2008-09-20 (Urban & Real Estate Economics)
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