Agglomeration and Knowledge Diffusion
AbstractAccording to New Growth Theory one can not rely on the convergence mechanisms inherent in traditional neoclassical constant returns to scale models. Convergence as well as divergence is possible, in general, depending on the assumptions about technology, factor mobility and ease of knowledge diffusion. The paper shows by a two-regions endogenous growth model under what conditions divergence, convergence or a stable centre-periphery structure emerge. The model allows for different degrees of knowledge diffusion as well as for different degrees of labor and capital mobility. The paper also evaluates dynamic market equilibria with respect to allocative efficiency. It is shown that the market solution tends to be under-agglomerated, except for parameter constellations generating particularly low agglomeration forces. If agglomeration forces are low enough, no concentration emerges, and this is also socially desirable. For higher agglomeration forces, however, concentration becomes desirable though the market may not bring it about or brings it about to an insufficient degree only. --
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Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2004,08.
Date of creation: 2004
Date of revision:
Convergence; divergence; agglomeration; endogenous growth; knowledge diffusion;
Find related papers by JEL classification:
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
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