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Adjustment Costs and Long Run Spatial Agglomerations

Author

Listed:
  • William Brock
  • Anastasios Xepapadeas
  • Athanasios Yannacopoulos

Abstract

We introduce knowledge spillovers as an externality in the production function of competitive ��firms operating in a ��nite spatial domain under adjustment costs. Spillovers are spatial as productive knowledge ��flows more easily among firms located nearby. When knowledge spillovers are not internalized by ��firms spatial agglomerations may emerge endogenously in a competitive equilibrium, however, they do not emerge at the steady state of the social optimum.

Suggested Citation

  • William Brock & Anastasios Xepapadeas & Athanasios Yannacopoulos, 2013. "Adjustment Costs and Long Run Spatial Agglomerations," DEOS Working Papers 1327, Athens University of Economics and Business.
    • Handle: RePEc:aue:wpaper:1327
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    References listed on IDEAS

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    1. Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-681, September.
    2. Brock, William A. & Xepapadeas, Anastasios & Yannacopoulos, Athanasios N., 2014. "Optimal agglomerations in dynamic economics," Journal of Mathematical Economics, Elsevier, vol. 53(C), pages 1-15.
    3. José Alexandre Scheinkman, 1978. "Stability of Separable Hamiltonians and Investment Theory," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 45(3), pages 559-570.
    4. Maryann Feldman, 1999. "The New Economics Of Innovation, Spillovers And Agglomeration: Areview Of Empirical Studies," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 8(1-2), pages 5-25.
    5. Chincarini, Ludwig & Asherie, Neer, 2008. "An analytical model for the formation of economic clusters," Regional Science and Urban Economics, Elsevier, vol. 38(3), pages 252-270, May.
    6. Brock, William A, 1974. "Money and Growth: The Case of Long Run Perfect Foresight," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 15(3), pages 750-777, October.
    7. Stefano Breschi & Francesco Lissoni, 2001. "articles: Localised knowledge spillovers vs. innovative milieux: Knowledge "tacitness" reconsidered," Papers in Regional Science, Springer;Regional Science Association International, vol. 80(3), pages 255-273.
    8. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75, pages 321-321.
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    More about this item

    Keywords

    Investment theory; adjustment costs; spatial agglomerations;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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