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on Economics of Strategic Management |
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Issue of 2005‒06‒05
two papers chosen by Joao Jose de Matos Ferreira University of the Beira Interior |
| By: | Kyoko Hirose (Graduate School of Economics, Osaka University) |
| Abstract: | In this paper, a Grossman-Helpman-Romer-type endogenous growth model is developed with two regions in which there are mobile workers and linkage between consumption goods and differentiated intermediate goods. The economy has the potential to reach the following spatial configuration: full agglomeration, partial agglomeration, and segmented agglomeration. In perfect agglomeration, the innovation sector and intermediate goods sector agglomerate in one region. In partial agglomeration, intermediate goods firms partially agglomerate in the region where the innovation sector agglomerates perfectly. In segmented agglomeration, the innovation sector agglomerates in the region where both intermediate goods sector and final good sector do not agglomerate perfectly. In addition, we show the comparison of the welfare of skilled workers in each steady state. Not surprisingly, the welfare of the skilled in full agglomeration is always the highest. However, even though there are transportation costs of final good, the welfare in segmented agglomeration is not necessarily the lowest. |
| Keywords: | knowledge spillovers, transportation costs, inter-regional trade |
| JEL: | F43 O18 R11 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0516&r=cse |
| By: | Kyoko Hirose (Graduate School of Economics, Osaka University); Kazuhiro Yamamoto (Graduate School of Economics, Osaka University) |
| Abstract: | A Grossman-Helpman-Romer-type endogenous-growth model is developed in this study. This model has two countries in which there are knowledge spillovers that are partially local. Owing to these spillovers, innovation cost in a particular country decreases as the number of firms locating in both that country and the other country increases. If international knowledge spillovers are symmetric, innovation cost is lower in the country that has the larger market. However, if a small-market country can absorb the international knowledge spillovers better than a large-market country, the innovation cost may be lower in the small-market country. When the innovation cost is lower in the country that has a large market, the growth rate increases with agglomeration, which is generated by a reduction in the transportation costs. However, when the innovation cost is lower in the country that has a small market, the growth rate decreases with the reduction in the transportation costs. |
| Keywords: | knowledge spillovers, growth rate, transportation costs, market scale |
| JEL: | F43 O30 R12 |
| Date: | 2005–06 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:0515&r=cse |