nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒06‒03
seven papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Standard-Setting and Knowledge Dynamics in Innovation Clusters By Julian P. Christ; André P. Slowak
  2. Survival of the Fittest in Cities: Agglomeration, Polarization, and Income Inequality By Kristian Behrens; Frédéric Robert-Nicoud
  3. The core-periphery model with three regions By Sofia B. S. D. Castro; Joao Correia-da-Silva; Pascal Mossay
  4. A Distribution Dynamics Approach to Regional GDP Convergence in Unified Germany By Juessen, Falko
  5. Globalisation: Countries, Cities and Multinationals By Philip McCann; Zoltan J. Acs
  6. Locational Determinants of Rural Non-agricultural Employment: Evidence From Brazil By Erik Jonasson; Steven M Helfand
  7. Equity Effects of Road Pricing, A Review By David Levinson

  1. By: Julian P. Christ (Universität Hohenheim); André P. Slowak (Universität Hohenheim)
    Abstract: Extensive research has been conducted on how firms and regions take advantage of spatially concentrated assets, and also why history matters to regional specialisation patterns. In brief, it seems that innovation clusters as a distinctive regional entity in international business and the geography of innovation are of increasing importance in STI policy, innovation systems and competitiveness studies. Recently, more and more research has contributed to an evolutionary perspective on collaboration in clusters. Nonetheless, the field of cluster or regional innovation systems remains a multidisciplinary field where the state of the art is determined by the individual perspective (key concepts could, for example, be industrial districts, innovative clusters with reference to OECD, regional knowledge production, milieus & sticky knowledge, regional lock-ins & path dependencies, learning regions or sectoral innovation systems). According to our analysis, the research gap lies in both quantitative, comparative surveys and in-depth concepts of knowledge dynamics and cluster evolution. Therefore this paper emphasises the unchallenged in-depth characteristics of knowledge utilisation within a cluster’s collaborative innovation activities. More precisely, it deals with knowledge dynamics in terms of matching different agents´ knowledge stocks via knowledge flows, common technology specification (standard-setting), and knowledge spillovers. The means of open innovation and system boundaries for spatially concentrated agents in terms of knowledge opportunities and the capabilities of each agent await clarification. Therefore, our study conceptualises the interplay between firm- and cluster-level activities and externalities for knowledge accumulation but also for the specification of technology. It remains particularly unclear how, why and by whom knowledge is aligned and ascribed to a specific sectoral innovation system. Empirically, this study contributes with several descriptive calculations of indices, e.g. knowledge stocks, GINI coefficients, Herfindahl indices, and Revealed Patent Advantage (RPA), which clearly underline a high spatial concentration of both mechanical engineering and biotechnology within a European NUTS2 sample for the last two decades. Conceptually, our paper matches the geography of innovation literature, innovation system theory, and new ideas related to the economics of standards. Therefore, it sheds light on the interplay between knowledge flows and externalities of cluster-specific populations and the agents’ use of such knowledge, which is concentrated in space. We find that knowledge creation and standard-setting are cross-fertilising each other: although the spatial concentration of assets and high-skilled labour provides new opportunities to the firm, each firm’s knowledge stocks need to be contextualised. The context in terms of ‘use case’ and ‘knowledge biography’ makes technologies (as represented in knowledge stocks) available for collaboration, but also clarifies relevance and ownership, in particular intellectual property concerns. Owing to this approach we propose a conceptualisation which contains both areas with inter- and intra-cluster focus. This proposal additionally concludes that spatial and technological proximity benefits standard-setting in high-tech and low-tech industries in very different ways. More precisely, the versatile tension between knowledge stocks, their evolution, and technical specification & implementation requires the conceptualisation and analysis of a non-linear process of standard-setting. Particularly, the use case of technologies is essential. Related to this approach, clusters strongly support the establishment of technology use cases in embryonic high-tech industries. Low-tech industries in contrast rather depend on approved knowledge stocks, whose dynamics provide better and fast accessible knowledge inputs within low-tech clusters.
    Keywords: innovation clusters, standard-setting, knowledge externalities and flows, knowledge alignment, mechanical engineering, biotechnology
    JEL: D89 L22 M20 O32
    Date: 2009–01
  2. By: Kristian Behrens; Frédéric Robert-Nicoud
    Abstract: Using a large sample of US urban areas, we provide systematic evidence that mean household income rises with city ('agglomeration'), that this effect is stronger for the top of the income distribution ('polarization'), and that household income inequality increases at a decreasing rate in city size ('inequality'). To account simultaneously for these facts, we develop a microfounded model of endogenous city formation in which urban centres select the most productive agents. Income inequality is driven by both the 'poverty' and the 'superstar' margins: whereas the least productive agents fail in a tougher urban environment, which increases 'poverty', the most productive agents become 'superstars' who reap the benefits from a larger urban market. At equilibrium, the returns to skills are increasing in city size, thereby dilating the income distribution. Our model is both rich and tractable enough to allow for a detailed investigation of when cities emerge, what determines their size, how they interact through the channels of trade, and how inter-city trade influences intra-city income inequality.
    Keywords: City size, agglomeration, income inequality, heterogeneity, firm selection
    JEL: D31 F12 R11 R12
    Date: 2009
  3. By: Sofia B. S. D. Castro (Faculdade de Economia and Centro de Matematica, Universidade do Porto); Joao Correia-da-Silva (CEF.UP and Faculdade de Economia, Universidade do Porto); Pascal Mossay (School of Economics, Henley Business School, University of Reading and Departamento de Fundamentos del Analisis Economico, Universidad de Alicante.)
    Abstract: We study a 3-region core-periphery model à la Krugman and compare our results with those of the standard 2-region model. The conditions for the stability of the dispersion and concentration configurations are established. Like in the 2-region model, dispersion and concentration can be simultaneously stable. We show that the 2- region (3-region) model favors the dispersion (concentration) of economic activity. Finally, we extend the core-periphery model to the case of n regions and show that stability of concentration with 2 regions implies stability of concentration with any even number of regions.
    Keywords: new economic geography, core-periphery
    JEL: R12 R23
    Date: 2009–06
  4. By: Juessen, Falko (University of Dortmund)
    Abstract: This paper uses nonparametric techniques to study GDP convergence across German labor market regions and counties during the period 1992-2004. The main result is that regional convergence in unified Germany has been substantial. In the first years after German unification the distribution of GDP has been characterized by a pronounced bimodality. The dispersion of the GDP distribution has become substantially smaller over time. Although some bimodality remains in most recent years, this bimodality is weak in comparison to previous years. Nevertheless, disparities among regions located in the Eastern and Western part of the country are still apparent.
    Keywords: regional convergence, distribution dynamics, nonparametric econometrics, stochastic kernel
    JEL: O47 R11 C14
    Date: 2009–05
  5. By: Philip McCann (University of Waikato NZ; University of Reading UK; University of Groningen, The Netherlands); Zoltan J. Acs (George Mason University)
    Abstract: In this paper we explore the relationship between the size of a country, the size of its cities, and the economic performance of the country. In order to do this we integrate three different literature, namely the literature on optimal country size, literature on historical processes of urbanisation and the performance of cities, and literature on the role of multinational firms in the global economy. Using an economic geography perspective, we demonstrate that the relationship between city-size and the prosperity of the nation state, to a much more complex set of relationships. In the modern era of globalisation the role of global companies within the city-region is critical, and city-regions in turn are seen to drive national economies. As such, the relationships between firms, cities and countries have been largely reversed, casting doubt on various institutional economic theories.
    Keywords: scale, cities, countries, multinational firms, globalisation
    JEL: R12 F23 N90 O33
    Date: 2009–06–04
  6. By: Erik Jonasson (Lund University, Sweden); Steven M Helfand (Department of Economics, University of California Riverside)
    Abstract: By paying particular attention to the local economic context, this paper analyzes the determinants of non-agricultural employment and earnings in non-agricultural jobs. The empirical analysis is based on the Brazilian Demographic Census, allowing for disaggregated controls for the local economy. Education stands out as one of the key determinants of employment outcome and earnings potential. Failure to control for locational effects, however, can lead to biased estimation of the importance of individual and household-specific characteristics. The empirical results show that local market size and distance to population centers have a significant impact on non-agricultural employment prospects and earnings.
    Keywords: Rural non-agricultural employment, economic geography, Latin America, Brazil
    Date: 2008–01
  7. By: David Levinson (Nexus (Networks, Economics, and Urban Systems) Research Group, Department of Civil Engineering, University of Minnesota)
    Abstract: Are road pricing strategies regressive or progressive? This is a question that has been confronting researchers, practitioners, and policy-makers who seek to implement new mechanisms to raise funds for transportation while simultaneously managing demand. The theoretical literature is mixed, as is the empirical literature. In part this has to do with the various types of road pricing strategies that are being debated, different definitions of equity, and alternative assumptions about revenue recycling. Despite this seeming complexity, the literature is clear that equity issues are addressable. This paper provides a synthesis of the literature to date on both the theory of equity, as applied to road pricing, and the findings of empirical and simulation studies of the effects of particular implementations of road pricing, and suggested remedies for real or perceived inequities. To summarize, while there are certainly potential issues with equity associated with road pricing, those issues can be addressed with intelligent mechanism design that provides the right incentives to travelers and uses the raised revenues in a way to achieve desired equitable ends. These include cutting other taxes and investing in infrastructure and services.
    JEL: R41 R42 R48 D02 D63
    Date: 2009

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