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The International Division of Industries: Clustering and Comparative Advantage in a Multi-Industry Model

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  • Venables, Anthony J

Abstract

We consider a model with a continuum of industries in which agglomeration forces cause each industry to concentrate in a single country. We study the division of industries between countries and show that this division is not unique, so that even with identical countries and symmetric industries the number of industries in each country need not be equal. Unequal divisions are sustainable as equilibria, even though they imply different wages in the two countries, and we find the bounds on the set of equilibrium divisions. With Ricardian differences in technology, there are equilibria in which industries operate in the country in which they have a comparative disadvantage. In both cases, a country may gain by using policy to grab a higher proportion of world industry.

Suggested Citation

  • Venables, Anthony J, 1998. "The International Division of Industries: Clustering and Comparative Advantage in a Multi-Industry Model," CEPR Discussion Papers 1961, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:1961
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    Cited by:

    1. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    2. Helena Marques, 2005. "The skilled u-shaped Europe: is it really and on which side does it stand?," Applied Economics, Taylor & Francis Journals, vol. 37(19), pages 2205-2220.
    3. Helena Marques & Hugh Metcalf, 2009. "Manufacturing Wages In The Enlarged Eu: The Role Of Neighbour-Country Effects," Manchester School, University of Manchester, vol. 77(1), pages 65-81, January.
    4. Lili Tan & Dao-Zhi Zeng, 2014. "Spatial inequality between developed and developing economies," Papers in Regional Science, Wiley Blackwell, vol. 93(2), pages 229-248, June.
    5. Pflüger, Michael P. & Tabuchi, Takatoshi, 2016. "Comparative Advantage and Agglomeration of Economic Activity," IZA Discussion Papers 10273, Institute for the Study of Labor (IZA).
    6. Bagoulla, Corinne & Péridy, Nicolas, 2011. "Market access and the other determinants of North–South manufacturing location choice: An application to the Euro-Mediterranean area," Economic Systems, Elsevier, vol. 35(4), pages 537-561.
    7. Epifani, Paolo, 2005. "Heckscher-Ohlin and agglomeration," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 645-657, November.
    8. Tabuchi, Takatoshi & Thisse, Jacques-François, 2002. "Regional Specialization and Transport Costs," CEPR Discussion Papers 3542, C.E.P.R. Discussion Papers.
    9. Toru Kikuchi & Dao-Zhi Zeng, 2004. "On Chamberlinian-Ricardian trade patterns with many industries," Economics Bulletin, AccessEcon, vol. 6(22), pages 1-9.
    10. Henry Overman & Stephen Redding & Anthony J. Venables, 2001. "The Economic Geography of Trade, Production, and Income: A Survey of Empirics," CEP Discussion Papers dp0508, Centre for Economic Performance, LSE.
    11. Maria Florencia Granato, 2011. "REGIONAL NEW ECONOMIC GEOGRAPHY (refereed paper)," ERSA conference papers ersa10p747, European Regional Science Association.
    12. Souleymane Coulibaly, 2004. "Evolving Cityscapes: Agglomeration and Specialization with Mobile Labor and Vertical Linkages," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.17, Université de Lausanne, Faculté des HEC, DEEP.
    13. Suga, Nobuhito & Hisanaga, Makoto, 2014. "Trade Patterns and the Gains from Trade in a Chamberlinian-Ricardian Model," Discussion paper series. A 267, Graduate School of Economics and Business Administration, Hokkaido University.
    14. repec:ebl:ecbull:v:6:y:2004:i:22:p:1-9 is not listed on IDEAS

    More about this item

    Keywords

    Agglomeration; Comparative Advantage; industrial clustering;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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