Agglomeration and comparative advantage in vertically-related firms
This paper models, in game-theoretical terms, the location of two vertically-linked monopolistic firms in a spatial economy formed by a large, high labor cost country and a relatively small, low labor cost country. It is found that the decrease in transport costs shifts firms towards the low production cost country. This process takes two different forms: in labor-intensive industries it leads to spatial fragmentation; in industries with strong input-output relations, agglomerations are conserved, although they shift toward the low labor cost country.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL|
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC
References listed on IDEAS
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- Amiti, Mary, 2001.
"Location of Vertically Linked Industries: Agglomeration versus Comparative Advantage,"
CEPR Discussion Papers
2800, C.E.P.R. Discussion Papers.
- Amiti, Mary, 2005. "Location of vertically linked industries: agglomeration versus comparative advantage," European Economic Review, Elsevier, vol. 49(4), pages 809-832, May.
- M Fujita, 1981. "Location of Firms with Input Transactions," Environment and Planning A, SAGE Publishing, vol. 13(11), pages 1401-1414, November.
- M Fujita, 1981. "Location of firms with input transactions," Environment and Planning A, Pion Ltd, London, vol. 13(11), pages 1401-1414, November.
- Mayer, T., 1999.
"Spatial Cournot Competition and Heterogeneous Production Costs Across Locations,"
Papiers d'Economie MathÃ©matique et Applications
1999.89, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Mayer, Thierry, 2000. "Spatial Cournot competition and heterogeneous production costs across locations," Regional Science and Urban Economics, Elsevier, vol. 30(3), pages 325-352, May.
- Thierry Mayer, 2000. "Spatial Cournot Competition and Heterogeneous Production Costs Across Locations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00267443, HAL.
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