Technology, Agglomeration, and Regional Competition for Investment
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Date
2001-06-01
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 research and development efforts 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
Keywords
Public economics, State and local government, State and local taxation, subsidies, and revenue, Industrial organization, Microeconomics, Technological change, Firm behavior, Innovation and invention (Processes and incentives), Intergovernmental relations, Technological innovations, Organization of production
Citation
Blonigen, Bruce A. and Van Kolpin. “Technology, Agglomeration, and Regional Competition for Investment.” Canadian Journal of Economics, Vol. 40(November 2007): 1149-1167.