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Location of R&D and High-Tech Production by Vertically-Integrated Multinationals

Author

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  • Ekholm, Karolina
  • Hakkala, Katariina

Abstract

We develop a two-country general equilibrium model where firms make separate choices about the location of R&D and high-tech production. There are two agglomeration forces: R&D spillovers and backward linkages associated with high-tech production. The latter tends to attract production to the larger economy. We show that, for relatively weak R&D spillovers and intermediate trade costs, the smaller economy tends to specialize in R&D. For certain parameterizations, both concentration and dispersion of R&D activities are possible outcomes. Hosting an agglomeration of R&D activities does not necessarily lead to welfare gains.

Suggested Citation

  • Ekholm, Karolina & Hakkala, Katariina, 2003. "Location of R&D and High-Tech Production by Vertically-Integrated Multinationals," CEPR Discussion Papers 4078, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4078
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Patrik Karpaty & Patrik Gustavsson Tingvall, 2015. "Offshoring and Home Country R&D," The World Economy, Wiley Blackwell, vol. 38(4), pages 655-676, April.
    2. Stiebale, Joel & Wößner, Nicole, 2017. "M&As, investment and financing constraints," DICE Discussion Papers 257, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    3. Colombo, Luca & Dawid, Herbert, 2014. "Strategic location choice under dynamic oligopolistic competition and spillovers," Journal of Economic Dynamics and Control, Elsevier, vol. 48(C), pages 288-307.
    4. Stiebale, Joel, 2016. "Cross-border M&As and innovative activity of acquiring and target firms," Journal of International Economics, Elsevier, vol. 99(C), pages 1-15.
    5. Roger Bandick & Holger Görg & Patrik Karpaty, 2016. "Foreign Acquisitions, Domestic Multinationals, and R&D," World Scientific Book Chapters,in: MULTINATIONAL ENTERPRISES AND HOST COUNTRY DEVELOPMENT Volume 53: World Scientific Studies in International Economics, chapter 4, pages 53-77 World Scientific Publishing Co. Pte. Ltd..
    6. Liu, Ju & Chaminade, Cristina, 2014. "Exploring the interplay, differences, and commonalities between global production networks and global innovation networks of two multinational companies," Papers in Innovation Studies 2014/7, Lund University, CIRCLE - Center for Innovation, Research and Competences in the Learning Economy.
    7. Rachel Griffith & Gareth Macartney, 2014. "Employment Protection Legislation, Multinational Firms, and Innovation," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 135-150, March.
    8. Stiebale, Joel & Vencappa, Dev, 2016. "Acquisitions, markups, efficiency, and product quality: Evidence from India," DICE Discussion Papers 229, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    9. Santos-Paulino, Amelia U. & Squicciarini, Mariagrazia & Fan, Peilei, 2008. "R&D (Re)location: A Bird's Eye (Re)view," WIDER Working Paper Series 100, World Institute for Development Economic Research (UNU-WIDER).
    10. Colin Davis & Ken-ichi Hashimoto, 2016. "Innovation and Manufacturing Offshoring with Fully Endogenous Productivity Growth," Discussion Papers 1636, Graduate School of Economics, Kobe University.

    More about this item

    Keywords

    agglomeration economies; high-tech production; monopolistic competition; R&D;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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