Learning-by-Doing and the Development of Industrial Districts

21 Pages Posted: 6 Nov 1998

See all articles by Antoine Soubeyran

Antoine Soubeyran

University of Angers - Research Group in Quantitative Saving (GREQAM)

Jacques-François Thisse

Catholic University of Louvain (UCL); Centre for Economic Policy Research (CEPR)

Date Written: July 27, 1998

Abstract

Marshallian districts are locales that accommodate a large number of small firms producing similar goods to be exported and benefit from the accumulation of know-how associated with workers residing there. We study the making of such districts by assuming that the cost function of a firm is a decreasing function of the total output produced in the past by the firms established in the locale. The dynamic is described by a sequence of temporary equilibria in which firms equalize profits between locales at each period. Hence changing the spatial distribution of firms affects the production history of each district. When new firms set up in a locale, they exacerbate competition on the corresponding labor market, thus leading to a wage rise that reduces the incentives for firms to locate in the most efficient district. The short-run equilibrium distribution of firms are studied as well as the long-run properties of the adjustment process.

JEL Classification: O14, R12

Suggested Citation

Soubeyran, Antoine and Thisse, Jacques-François, Learning-by-Doing and the Development of Industrial Districts (July 27, 1998). FEEM Working Paper ETA 46.98. Available at SSRN: https://ssrn.com/abstract=123468 or http://dx.doi.org/10.2139/ssrn.123468

Antoine Soubeyran

University of Angers - Research Group in Quantitative Saving (GREQAM) ( email )

Centre de la Vieille Charité
2, rue de la Charité
Marseille, 13002
France
+33 442 935 984 (Phone)
+33 442 930 968 (Fax)

Jacques-François Thisse (Contact Author)

Catholic University of Louvain (UCL) ( email )

Place des Doyens 1
Louvain-la-Neuve, 1348
Belgium

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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