Regional Specialization and Technological Leapfrogging

Abstract:     
This paper investigates circumstances where a region loses its technological leadership after some major technological breakthrough. Input-output linkages between firms in a Cournot upstream industry and a perfectly competitive downstream industry create forces for agglomeration in particular locations, driving up prices of immobile factors. A new superior technology, incompatible with the old, will not benefit from these linkages, so is more likely to be established in locations with little existing industry due to lower factor prices. Furthermore, it is possible that the old and new technologies can coexist.

Number of Pages in PDF File: 23

JEL Classification: F12, F17, O33

working papers series