Technology, Agglomeration, and Regional Competition for Investment
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Date
2003-09-01
Authors
Blonigen, Bruce A.
Kolpin, Van
Journal Title
Journal ISSN
Volume Title
Publisher
University of Oregon, Dept of Economics
Abstract
The active "courting" of firms by municipalities, regions, and even nations has a long-standing history and the competition for firm location through a wide variety of incentives seems to have escalated to new heights in recent years. We develop a model that explores technology development by firms that face regional competition for their investment and examine the endogenous determination of regions� policies, firm technology, and agglomeration externalities. In particular, we find that regional competition leads firms to inefficiently distort their development and selection of production technology in hopes of improving their standing in the competition amongst regions for their investment. This loss in efficiency is aggravated by the agglomeration externalities that are inherently present in many industries. We offer several case studies that provide evidence consistent with our theoretical conclusions.
Description
25 p.
Keywords
Public economics, Local government, State government, Intergovernmental relations, State and local taxation, Subsidies, Revenue, Industrial organization, Firm objectives, organization and behavior, Organization of production, Microeconomics, Production and organization, Firm behavior, Economic development, Technological change, Innovation and invention, Technological innovations