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Technology, Agglomeration, and Regional Competition for Investment

Author

Listed:
  • Bruce A. Blonigen

    (University of Oregon Economics Department)

  • Van Kolpin

    (University of Oregon Economics Department)

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.

Suggested Citation

  • Bruce A. Blonigen & Van Kolpin, 2001. "Technology, Agglomeration, and Regional Competition for Investment," University of Oregon Economics Department Working Papers 2001-10, University of Oregon Economics Department, revised 01 Jun 2001.
    • Handle: RePEc:ore:uoecwp:2001-10
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    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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