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Product Innovation, Export And Location Of Entrepreneurship

Author

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  • Andersson, Martin

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Johansson, Börje

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

This paper introduces a model where new products are introduced by entrepreneurs or innovating firms in a quasi-temporal setting. Market conditions are characterized by monopolistic competition between varieties belonging to the same product group, where varieties can become obsolete over time and hence disappear from demand. Firms that innovate have to make an R&D investment, and a firm’s decision to export a variety to a given market is associated with a market channel investment. The model is used to predict export behavior by firms in different regional milieus, and these predictions are compared with observations from a rich data set describing export activities of Swedish firms. The data set contains firm level information about export flows, where the flow of each variety is associated with the exporting firm’s location, export value, price and destination. In the empirical analysis we examine how the arrival of innovation ideas varies across regions and how this variation depends on regional characteristics.

Suggested Citation

  • Andersson, Martin & Johansson, Börje, 2006. "Product Innovation, Export And Location Of Entrepreneurship," Working Paper Series in Economics and Institutions of Innovation 75, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0075
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    File URL: https://static.sys.kth.se/itm/wp/cesis/cesiswp75.pdf
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    References listed on IDEAS

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    1. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
    2. Fujita,Masahisa & Thisse,Jacques-François, 2013. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9781107001411.
    3. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    4. Krugman, Paul, 1979. "A Model of Innovation, Technology Transfer, and the World Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 253-266, April.
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    Cited by:

    1. Flora Bellone & Patrick Musso & Lionel Nesta & Michel Quere, 2008. "The U-Shaped Productivity Dynamics of French Exporters," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(4), pages 636-659, December.

    More about this item

    Keywords

    location; entrepreneurship; innovation; exports; diversity;

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • 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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