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Modeling Industrial Evolution in Geographical Space

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Author Info
Giulio Bottazzi
Giovanni Dosi
Giorgio Fagiolo
Angelo Secchi

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Abstract

In this paper we study a class of evolutionary models of industrial agglomeration with local positive feedbacks, which allow for a wide set of empirically-testable implications. Their roots rest in the Generalized Polya Urn framework. Here, however, we build on a birth-death process over a finite number of locations and a finite population of firms. The process of selection among production sites that are heterogeneous in their ?intrinsic attractiveness? occurs under a regime of dynamic increasing returns depending on the number of firms already present in each location. The general model is presented together with a few examples of small economies which help to illustrate the properties of the model and characterize its asymptotic behavior. Finally, we discuss a number of empirical applications of our theoretical framework. The basic model, once taken to the data, is able to empirically disentangle the relative strength of technologically-specific agglomeration drivers (affecting differently firms belonging to different industrial sectors in each location) from site-specific geographical forces (horizontally acting upon all sectors in each location).

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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 2007/06.

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Date of creation: 01 Mar 2007
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Handle: RePEc:ssa:lemwps:2007/06

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Related research
Keywords: Industrial Location Agglomeration Dynamic Increasing Returns Markov Chains Polya Urns.

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  3. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2005. "Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 365-391, June.
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  5. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May. [Downloadable!] (restricted)
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  6. Brusco, Sebastiano, 1982. "The Emilian Model: Productive Decentralisation and Social Integration," Cambridge Journal of Economics, Oxford University Press, vol. 6(2), pages 167-84, June.
  7. Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August. [Downloadable!] (restricted)
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  8. Michael P. Devereux & Rachel Griffith & Helen Simpson, 2000. "The Geographic Distribution of Production Activity in the UK," Econometric Society World Congress 2000 Contributed Papers 1397, Econometric Society. [Downloadable!]
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  9. James D. Adams, 2002. "Comparative localization of academic and industrial spillovers," Journal of Economic Geography, Oxford University Press, vol. 2(3), pages 253-278, July.
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  10. Giulio Bottazzi & Giovanni Dosi & Giorgio Fagiolo & Angelo Secchi, 2004. "Sectoral and Geographical Specificities in the Spatial Structure of Economic Activities," LEM Papers Series 2004/21, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy. [Downloadable!]
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  11. Ron A. Boschma & Koen Frenken, 2006. "Why is economic geography not an evolutionary science? Towards an evolutionary economic geography," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 273-302, June. [Downloadable!] (restricted)
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  12. Dosi, Giovanni & Ermoliev, Yuri & Kaniovski, Yuri, 1994. "Generalized urn schemes and technological dynamics," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 1-19, January. [Downloadable!] (restricted)
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  16. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August. [Downloadable!] (restricted)
  17. Brakman, Steven & Garretsen, Harry, 2006. "New economic geography: Closing the gap between theory and empirics," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 569-572, September. [Downloadable!] (restricted)
  18. Glenn Ellison & Edward L. Glaeser, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May. [Downloadable!] (restricted)
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  19. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-74, September.
  20. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  21. T. Brenner, 2003. "An Identification of Local Industrial Clusters in Germany," Papers on Econonmics and Evolution 2003-04, Max Planck Institute of Economics, Evolutionary Economics Group.
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