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Strategic investment and industry location in a footloose capital model of economic geography

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  • Fujiwara, Kenji

Abstract

This paper examines how strategic investment of capitalists affects the industry location in a footloose capital model. We show that the home market effect is robust but is moderated when capitalists strategically invest. That is, the industry location is closer to dispersion when capitalists are strategic than when they are atomic.

Suggested Citation

  • Fujiwara, Kenji, 2021. "Strategic investment and industry location in a footloose capital model of economic geography," Economics Letters, Elsevier, vol. 203(C).
    • Handle: RePEc:eee:ecolet:v:203:y:2021:i:c:s0165176521001208
    DOI: 10.1016/j.econlet.2021.109843
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    References listed on IDEAS

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    1. Richard Baldwin & Rikard Forslid & Philippe Martin & Gianmarco Ottaviano & Frederic Robert-Nicoud, 2005. "Economic Geography and Public Policy," Economics Books, Princeton University Press, edition 1, number 7524.
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    Cited by:

    1. Commendatore, Pasquale & Kubin, Ingrid & Sushko, Iryna, 2022. "Big or small? A new economic geography model with an endogenous switch in the market structure," Chaos, Solitons & Fractals, Elsevier, vol. 161(C).

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    More about this item

    Keywords

    Footloose capital model; Strategic investment; Industry location;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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