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Mapping Sectoral Patterns of Technological Accumulation into the Geography of Corporate Locations. A Simple Model and Some Promising Evidence

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  • Giulio Bottazzi
  • Giorgio Fagiolo
  • Giovanni Dosi

Abstract

Economies of agglomeration are central in understanding the emergence of industrial clustering. However, existing models that incorporate economies of agglomeration to explain industrial concentration have been providing a quite small set of empirically testable predictions. In this paper, we propose a baseline model in which myopic firms make reversible locational choices in presence of dynamic increasing returns from agglomeration. Despite its simplicity, the model is able to deliver predictions about the long-run distribution of the size of spatial clusters. We test the predictions of the model against data on geographical distribution of Italian firms across industrial districts. We show that, at least in some benchmark industries, accordance of theoretical predictions with data is quite high. Finally, we explore the extents to which industrial sectors exhibit different economies of agglomeration. We find that geographical clustering is highly affected by intersectoral differences in industrial innovation patterns and learning regimes.

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Paper provided by Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy in its series LEM Papers Series with number 2002/21.

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Date of creation: 25 Dec 2002
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Handle: RePEc:ssa:lemwps:2002/21

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Keywords: Location Dynamics; Industrial Clustering; Economies of Agglomeration; Firm Locational Choice.;

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  1. Papageorgiou, Yorgo Y & Smith, Terrence R, 1983. "Agglomeration as Local Instability of Spatially Uniform Steady-States," Econometrica, Econometric Society, vol. 51(4), pages 1109-19, July.
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  3. Antonelli, Cristiano, 1986. "The international diffusion of new information technologies," Research Policy, Elsevier, vol. 15(3), pages 139-147, June.
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  5. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  6. Martin, Ron, 1999. "The New 'Geographical Turn' in Economics: Some Critical Reflections," Cambridge Journal of Economics, Oxford University Press, vol. 23(1), pages 65-91, January.
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  9. P Krugman & Anthony J. Venables, 1993. "Intergration," CEP Discussion Papers dp0172, Centre for Economic Performance, LSE.
  10. Giulio Bottazzi & Giovanni Dosi & Giorgio Fagiolo, 2001. "On the Ubiquitous Nature of the Agglomeration Economies and their Diverse Determinants: Some Notes," LEM Papers Series 2001/10, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  11. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  12. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
  13. Fujita, Masahisa & Hamaguchi, Nobuaki, 2001. "Intermediate goods and the spatial structure of an economy," Regional Science and Urban Economics, Elsevier, vol. 31(1), pages 79-109, February.
  14. Kirman, Alan, 1993. "Ants, Rationality, and Recruitment," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 137-56, February.
  15. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
  16. Malerba, Franco, 1992. "Learning by Firms and Incremental Technical Change," Economic Journal, Royal Economic Society, vol. 102(413), pages 845-59, July.
  17. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  18. Robin Cowan & William Cowan, 1998. "On Clustering in the Location of R&D: Statics and Dynamics," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 6(2-3), pages 201-230.
  19. Fujita, Masahisa & Krugman, Paul & Mori, Tomoya, 1999. "On the evolution of hierarchical urban systems1," European Economic Review, Elsevier, vol. 43(2), pages 209-251, February.
  20. John Cantwell & Simona Iammarino, 1998. "MNCs, Technological Innovation and Regional Systems in the EU: Some Evidence in the Italian Case," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 5(3), pages 383-408.
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Cited by:
  1. Simona Iammarino & Philip McCann, 2006. "The Structure and Evolution of Industrial Clusters: Transactions, Technology and Knowledge Spillovers," SPRU Working Paper Series 138, SPRU - Science and Technology Policy Research, University of Sussex.

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