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The division of labor need not imply regional specialization

  • Leppälä, Samuli
  • Desrochers, Pierre

The regional specialization of economic activities is generally deemed desirable for three reasons: (1) the law of comparative advantage; (2) localized economies of scale; and (3) knowledge spillovers. Taking a methodological individualist perspective, we claim that: (1) the law of comparative advantage, while valid for individuals and firms, does not necessarily imply regional specialization when regions are viewed as consisting of heterogeneous individuals; (2) localized economies of scale are seldom specific to one industry and external in all but the regional level; and (3) the study of knowledge spillovers is inconclusive and would benefit from a more disaggregated perspective.

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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 74 (2010)
Issue (Month): 1-2 (May)
Pages: 137-147

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Handle: RePEc:eee:jeborg:v:74:y:2010:i:1-2:p:137-147
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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