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Industrial Agglomeration: Economic Geography, Technological Spillover And Policy Incentives

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  • Emanuele Bracco

    (Department of Economics, Lancaster University, Lancaster, LA1 4YW, United Kingdom)

Abstract

In a Marshallian Industrial District (MID) agglomeration of firms is triggered by the presence of specialized workforce in a concentrated area. Labour mobility across firms then generates knowledge spillover across firms, i.e. a positive location. This centripetal force is balanced by centrifugal forces like congestion costs and increased prices of specific factors caused by the increased local demand. On the other hand, the New Economic Geography (NEG) approach on firm location focuses on pecuniary advantages deriving from being clustered. This implies that a region is bound to have specific welfare advantages when an industrial cluster is located within it. Because of these advantages, there may be incentives for ‘‘industry grabbing’’ policies and tax competition between nations or regions. We analyse the case of policy incentives in a NEG framework with technological spillover to the R&D sector. In this framework subsidizing R&D in the industrial region may lead to welfare improvement.

Suggested Citation

  • Emanuele Bracco, 2014. "Industrial Agglomeration: Economic Geography, Technological Spillover And Policy Incentives," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 122(1), pages 3-18.
    • Handle: RePEc:vep:journl:y:2014:v:122:i:1:p:3-18
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    Cited by:

    1. Wang, Yanan & Yin, Shiwen & Fang, Xiaoli & Chen, Wei, 2022. "Interaction of economic agglomeration, energy conservation and emission reduction: Evidence from three major urban agglomerations in China," Energy, Elsevier, vol. 241(C).

    More about this item

    Keywords

    Industrial districts; Subsidy; New economic geography; Industrial cluster;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • 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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