nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒11‒07
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Agglomeration Theory with Heterogeneous Agents By Kristian Behrens; Frédéric Robert-Nicoud
  2. Spatial centrality: an approach with sectoral linkages By Nuno Crespo; M. Paula Fontoura; Nádia Simões
  3. The Role of R&D Collaboration Networks on Regional Innovation Performance By Cilem Selin Hazir; James Lesage; Corinne Autant-Bernard
  4. RHOMOLO: A Dynamic Spatial General Equilibrium Model for Assessing the Impact of Cohesion Policy By Andries Brandsma; d'Artis Kancs; Philippe Monfort; Alexandra Rillaers
  5. The Impact of Regional and Sectoral Productivity Changes on the U.S. Economy By Caliendo, Lorenzo; Parro, Fernando; Rossi-Hansberg, Esteban; Sarte, Pierre-Daniel G.
  6. Sugar Cane Burning and Human Health: a Spatial Difference –in-Difference Analysis By André Luis Squarize Chagas; Alexandre N. Almeida, Carlos Roberto Azzoni
  7. Local poverty reduction in Chile and Mexico: The role of food manufacturing growth By Isidro Soloaga; Chiara Cazzuffi; Mariana Pereira
  8. The causes of urban sprawl in Spanish urban areas: a spatial approach By Miguel Gómez-Antonio; Miriam Hortas-Rico; Linna Li
  9. “Don’t throw the baby out with the bath water”. Network failures and policy challenges for cluster long run dynamics By Jérôme Vicente
  10. The effects of biased technological changes on total factor productivity: a rejoinder and new empirical evidence By Cristiano Antonelli; Francesco Quatraro
  11. Hotelling meets Holmes : the importance of returns to product differentiation and distribution economies for the firm's optimal location choice By Anett Erdmann

  1. By: Kristian Behrens; Frédéric Robert-Nicoud
    Abstract: This chapter surveys recent developments in agglomeration theory within a unifying framework. We highlight how locational fundamentals, agglomeration economies, the spatial sorting of heterogeneous agents, and selection effects affect the size, productivity, composition, and inequality of cities, as well as their size distribution in the urban system.
    Keywords: agglomeration; heterogeneous agents; selection; sorting; inequality; city-size distribution
    Date: 2014–09
  2. By: Nuno Crespo; M. Paula Fontoura; Nádia Simões
    Abstract: This paper proposes a measure with six components to evaluate the degree of centrality (advantage) of a sector located in a region considering internal and external components and economic and geographical aspects. The main novelty of this indicator is that the definition of “mass” takes into consideration intra and inter-sectoral effects. In fact, the new economic geography has shown that a sector takes advantage of being in a particular location through two main channels: the proximity to other firms in the sector (intrasectoral effects) and spillover effects arising from the proximity to upstream and downstream sectors (inter-sectoral effects). The two effects will be considered in both the region of location of the sector under analysis and in the other regions related to it. The hypothesis is that the spatial centrality of a sector varies positively with geographic proximity to firms in the same economic sector and in other sectors connected by vertical linkages and negatively with inter-regional distance. The index allows a double reading: it is possible to identify the sectors in which the region has a higher degree of centrality and the regions with a greater degree of centrality in this sector. To illustrate the method, we include an example for the Portuguese economy at the county level (275 regional units).
    Date: 2014–09
  3. By: Cilem Selin Hazir (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL)); James Lesage (Texas State University - Texas State University); Corinne Autant-Bernard (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure (ENS) - Lyon - PRES Université de Lyon - Université Jean Monnet - Saint-Etienne - Université Claude Bernard - Lyon I (UCBL))
    Abstract: In this study, we consider R&D collaboration networks as a mechanism that modifies knowledge flows in space, and hence as another source of interaction among regional innovation processes. Our objective is to understand the relative role of spatial neighbors and network neighbors on patenting performance of regions. We make use of data on R&D collaborations supported by the European Union's Framework Programs (FP) and empirically investigate the patent activity of 213 European regions in the field of ICT during 2003-2009. Concerning the short length of the time frame we adopt a static modeling strategy and specify a spatial Durbin Model. As spatial neighbors intersect with network neighbors we decompose neighbor regions into three sets: spatially proximate regions that are not collaboration partners, spatially proximate regions that are collaboration partners, and distant collaboration partners. We express the weight matrix as a convex combination of these three sets and by means of gridding we compare how model fit changes as we move from a purely space based view to a purely network based view to express the dependence structure. The weight matrix that performs the best accords 60% weight to distant collaboration partners, 30% weight to proximate collaboration partners and 10% weight to proximate regions with whom there is no FP collaboration. This result reveals that the interaction (proximate and distant) among European regions within FP networks in the field of ICT is key for understanding dependence among their patenting performances.
    Keywords: R&D collaboration networks; innovation performance; spatial econometrics; ICT
    Date: 2014
  4. By: Andries Brandsma; d'Artis Kancs; Philippe Monfort; Alexandra Rillaers
    Abstract: The paper presents the newly developed dynamic spatial general equilibrium model of European Commission, RHOMOLO. The model incorporates several elements from economic geography in a novel and theoretically consistent way. It describes the location choice of different types of agents and captures the interplay between agglomeration and dispersion forces in determining the spatial equilibrium. The model is also dynamic as it allows for the accumulation of factors of production, human capital and technology. This makes RHOMOLO well suited for simulating policy scenario related to the EU cohesion policy and for the analysis of its impact on the regions and the Member States of the union.
    Date: 2014–10
  5. By: Caliendo, Lorenzo (Yale University); Parro, Fernando (Board of Governors of the Federal Reserve System (U.S.)); Rossi-Hansberg, Esteban (Princeton University); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond)
    Abstract: We study the impact of regional and sectoral productivity changes on the U.S. economy. To that end, we consider an environment that captures the effects of interregional and intersectoral trade in propagating disaggregated productivity changes at the level of a sector in a given U.S. state to the rest of the economy. The quantitative model we develop features pairwise interregional trade across all 50 U.S. states, 26 traded and non-traded industries, labor as a mobile factor, and structures and land as an immobile factor. We allow for sectoral linkages in the form of an intermediate input structure that matches the U.S. input-output matrix. Using data on trade flows by industry between states, as well as other regional and industry data, we obtain the aggregate, regional and sectoral elasticities of measured TFP, GDP, and employment to regional and sectoral productivity changes. We fi nd that such elasticities can vary signi cantly depending on the sectors and regions affected and are importantly determined by the spatial structure of the US economy. We highlight the role of these elasticities by tracing out the effects of productivity gains in California in the Computers and Electronics industry between 2002 and 2007 on all other U.S. sectors and regions.
    Keywords: Interregional trade; intersectoral linkages; total factor productivity; gross domestic product; factor mobility
    JEL: F10 F11 O40 O47 R12 R13
    Date: 2014–08–06
  6. By: André Luis Squarize Chagas; Alexandre N. Almeida, Carlos Roberto Azzoni
    Abstract: The production of ethanol and sugar from sugar cane has sharply increased in Brazil in the last 20 years, in a process of substitution of biofuel for fossil fuels. The increase in the production and the expansion of the cultivated area might have impacts on human health and employment, especially at the regional level. So far, the harvest is basically manual, involving low-skill workers. The burning of the cane is meant to increase labor productivity and has been traditionally executed. However, the burning generates a massive quantity of smoke that spread in the region, reaching neighboring cities, thus becoming a potential threat to the human health. The objective of this paper is to measure the impact of burning on respiratory problems of children, teenagers and elderly people. We work with a balanced panel of 644 municipalities, from 2002 to 2011. We use a spatial difference-in-difference technique, to control for the effect of sugarcane burning on non-producing regions in the vicinity of producing regions. We conclude that sugar cane burning significantly increases the incidence of respiratory problems in producing regions. The use of a spatial diff-in-diff model allowed us to find out that the effect on non-producing nearby regions is also significant and quantitatively relevant, at least 66% of the effect on producing regions.
    Keywords: Sugar Cane Burning; Health Condition; Spatial Econometrics
    JEL: C14 C21 Q18
    Date: 2014–10–17
  7. By: Isidro Soloaga (Department of Economics, Universidad Iberoamericana, Mexico City. Mexico); Chiara Cazzuffi; Mariana Pereira
    Abstract: This paper analyses the relationship between local poverty and food manufacture growth in Chile and Mexico using propensity score matching, differences in differences and spatial econometrics methods. We focus on food manufacture as a sector with a number of characteristics that make it potentially pro-poor, and whose incentives for spatial distribution may either strengthen or dampen its poverty reduction potential. The overall results indicate that i) geographically, food manufacture locates in relatively poor areas, but not in the poorest; ii) food manufacture tends to locate in municipalities with more availability of labor and raw materials and with better infrastructure; iii) controlling for other factors, food manufacture growth contributes to local poverty reduction both in terms of magnitude and speed.
    Date: 2014
  8. By: Miguel Gómez-Antonio; Miriam Hortas-Rico; Linna Li
    Abstract: WThis paper explores the role of interjurisdictional competition among local governments in fostering urban sprawl. The structure of local public finance along with housing and land-use policies make land a valuable commodity the supply of which is monopolised by local governments. This situation creates economic incentives for local governments (in terms of higher income and tax revenues) to influence development patterns and even engage in strategic interaction with neighbouring jurisdictions to compete for the creation of new residential areas. We empirically assess the presence of local spatial interaction in urban sprawl in Spanish urban areas. Thanks to the recent availability of a novel data set based on remotely sensed data from aerial photography and satellite imaging, we have been able to study urban development patterns across the country with unprecedented detail. We make use of GIS techniques to calculate a sprawl measure as the dependent variable and compile a database of independent variables on land use and topographic features, complemented with additional information on weather conditions, social, demographic, political and economic variables, which are then used in a spatial regression model. The results confirm our main hypothesis: there exists spatial interaction in the levels of sprawl between neighbouring municipalities, suggesting that local governments do indeed compete for the creation of new suburban settlement developments, hence promoting excessive urban sprawl.
    Keywords: urban sprawl, spatial econometrics, strategic interaction, local governments.
    JEL: C21 H7 R14
    Date: 2014–10
  9. By: Jérôme Vicente
    Abstract: Cluster policies have been recently called into question in the aftermath of several empirical evidences. Disentangling how market and network failures arguments play together in cluster policy design, we look for more robust micro foundations of network structuring in clusters. Our aim is to show that, in spite of this growing skepticism, new opportunities for cluster policy exist. They require moving their focus from the “connecting people” one best way that gets through the whole of cluster policy guidelines, to more surgical incentives for R&D collaborations, which favor suited structural properties of local knowledge networks along the life cycle of clusters.
    Keywords: cluster policy, knowledge spillover, network failures
    JEL: B52 D85 O33 R12
    Date: 2014–10
  10. By: Cristiano Antonelli (Department of Economics, University of Turin - University of Turin); Francesco Quatraro (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis (UNS))
    Abstract: The paper by Ji and Wang (J Technol Transf, 2013) calls new attention on the analysis of the effects of the direction of technological change. The aim of this paper is to better articulate and test the theoretical arguments that the direction of technological changes has specific effects on the efficiency of the production process and to study the incentives and the processes that lead to its introduction. The decomposition of total factor productivity growth into the bias and the shift effects enables to articulate the hypothesis that the types of technological change whether more neutral or more biased reflect the variety of the innovation processes at work. The evidence of a large sample of European regions tests the hypothesis that regional innovations systems with a strong science base are better able to introduce neutral technological changes while regional innovation systems that rely more upon learning processes and tacit knowledge favor the introduction of directed technologies a form of meta-substitution that aims at exploiting the opportunities provided by the most intensive use of locally abundant factors.
    Date: 2014–01–06
  11. By: Anett Erdmann
    Abstract: Inspired by the empirical work of Holmes (2011), which suggests the economic importance of distribution costs in the firm's optimal location decision, this paper introduces endogenous distribution costs in the model of Hotelling (1929). The proposed model shows an interesting trade-off between demand and cost considerations when a firm plays a hybrid location strategy. Given the location of local distribution centers and agents' displacement cost parameters, it is shown that, under certain conditions, the optimal location of the firms are in the interior of the Hotelling line rather than at the edges of the line. The supply cost effect which drives this result diminishes with the distance of the distribution center from the market so that the scale of the distribution area becomes also determinant for an optimal location strategy. The theoretical results are complemented with an empirical analysis for distribution intensive grocery retailers using location data for the two main conventional supermarket chains in the U.S. The data suggest that the firms consider distribution costs when differentiating from the competitor.
    Keywords: Firm strategy , product differentiation , distribution costs , price competition , location choice , retail competition
    JEL: L13 L22 L81 D43 R10 R30
    Date: 2014–10

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