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Spillovers and growth in a local interaction model

Author

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  • Alessandra Cassar
  • Rosella Nicolini

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Abstract

In this paper we aim at studying to what extent spillovers between firms may foster economic growth. The attention is addressed to the spillovers connected with the R&D activity that improves the quality of the goods firms supply. Our model develops a growth theory framework and we assume that firms spread around a circle. Our study assesses that spillovers between neighbors affect the probability of successful research for each of them. In particular, spillovers are the forces fuelling growth when, on the whole, firms turn out to be net receivers with respect to their neighbors.

Suggested Citation

  • Alessandra Cassar & Rosella Nicolini, 2003. "Spillovers and growth in a local interaction model," UFAE and IAE Working Papers 574.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  • Handle: RePEc:aub:autbar:574.03
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    References listed on IDEAS

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    1. Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders and Product Cycles," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 557-586.
    2. Basevi, Giorgio & Ottaviano, Gianmarco, 2001. "The District and the Global Economy: Exporting versus Foreign Location," CEPR Discussion Papers 2976, C.E.P.R. Discussion Papers.
    3. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608 Elsevier.
    4. Giorgio Basevi & Gianmarco I.P. Ottaviano, 2002. "The District and the Global Economy: Exportation Versus Foreign Location," Journal of Regional Science, Wiley Blackwell, vol. 42(1), pages 107-126.
    5. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth through Creative Destruction," Econometrica, Econometric Society, vol. 60(2), pages 323-351, March.
    6. Feldman, Maryann P. & Audretsch, David B., 1999. "Innovation in cities:: Science-based diversity, specialization and localized competition," European Economic Review, Elsevier, vol. 43(2), pages 409-429, February.
    7. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, January.
    8. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9781107001411, May.
    9. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-640, June.
    10. Paul Krugman, 1992. "Geography and Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262610868, January.
    11. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Junhua Li & Wenli Cheng, 2015. "Country Size, Economic Structure and Transaction Efficiency: An Asymmetric Spatial General Equilibrium Model of Income Differences across Nations," Monash Economics Working Papers 17-15, Monash University, Department of Economics.

    More about this item

    Keywords

    Firm agglomerations; Local Spillovers; Economic Growth;

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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