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Increasing Returns, Input-Output Linkages, and Technological Leapfrogging

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  • Gallo Fredrik

    () (Lund University, Sweden)

Abstract

Firms agglomerate in one region due to increasing returns, input-output linkages and transportation costs. In the de-industrialised region factor prices are lower and a new technology may be profitable to adopt in that region instead, inducing a change in the technological leadership. This paper shows that the risk of locking in to an old technology is monotonically increasing in the benefits of agglomeration. Greater incompatibility between technologies also increases the risk of rejecting potentially superior manufacturing processes.

Suggested Citation

  • Gallo Fredrik, 2006. "Increasing Returns, Input-Output Linkages, and Technological Leapfrogging," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 6(1), pages 1-29, August.
  • Handle: RePEc:bpj:bejeap:v:topics.6:y:2006:i:1:n:13
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    References listed on IDEAS

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    1. Paul Krugman & Anthony J. Venables, 1995. "Globalization and the Inequality of Nations," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 857-880.
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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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