Modeling Industrial Evolution in Geographical Space

Posted: 7 Jul 2008

See all articles by Giulio Bottazzi

Giulio Bottazzi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Giorgio Fagiolo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM)

Angelo Secchi

Université Paris I Panthéon-Sorbonne; Paris School of Economics (PSE)

Date Written: September 2007

Abstract

In this article we study a class of evolutionary models of industrial agglomeration with local positive feedbacks, which allow for a wide set of empirically testable implications. Their roots rest in the Generalized Polya Urn framework. Here, however, we build on a birth-death process over a finite number of locations and a finite population of firms. The process of selection among production sites that are heterogeneous in their ‘intrinsic attractiveness’ occurs under a regime of dynamic increasing returns depending on the number of firms already present in each location. The general model is presented together with a few examples of small economies which help to illustrate the properties of the model and characterize its asymptotic behavior. Finally, we discuss a number of empirical applications of our theoretical framework. The basic model, once taken to the data, is able to empirically disentangle the relative strength of technologically specific agglomeration drivers (affecting differently firms belonging to different industrial sectors in each location) from site-specific geographical forces (horizontally acting upon all sectors in each location).

Keywords: industrial location, agglomeration, dynamic increasing returns, markov chains, polya urns, C1, L6, R1

Suggested Citation

Bottazzi, Giulio and Dosi, Giovanni and Fagiolo, Giorgio and Secchi, Angelo, Modeling Industrial Evolution in Geographical Space (September 2007). Journal of Economic Geography, Vol. 7, Issue 5, pp. 651-672, 2007, Available at SSRN: https://ssrn.com/abstract=1155882 or http://dx.doi.org/10.1093/jeg/lbm024

Giulio Bottazzi (Contact Author)

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy
+39-050-883343 (Phone)
+39-050-883344 (Fax)

Giovanni Dosi

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy

HOME PAGE: www.lem.sssup.it

Giorgio Fagiolo

Scuola Superiore Sant'Anna di Pisa - Laboratory of Economics and Management (LEM) ( email )

Piazza Martiri della Liberta, 33
Pisa, I-56127
Italy
+39-050-883341 (Phone)
+39-050-883344 (Fax)

Angelo Secchi

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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