This letter investigates the role of technological externalities on the geographical distribution of firms. In an analytically solvable model, we show how the location of economic activities is affected by the trade-off between pecuniary externalities, as dependent on transportation costs, and localized technological externalities, as dependent on inter-regional spillovers.
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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
2008/11.
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