Technology, Agglomeration, and Regional Competition for Investment

26 Pages Posted: 28 Mar 2002 Last revised: 7 Mar 2015

See all articles by Bruce A. Blonigen

Bruce A. Blonigen

University of Oregon - Department of Economics; National Bureau of Economic Research (NBER)

Van Kolpin

University of Oregon - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 2002

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

Blonigen, Bruce A. and Kolpin, Van, Technology, Agglomeration, and Regional Competition for Investment (March 2002). NBER Working Paper No. w8862. Available at SSRN: https://ssrn.com/abstract=305606

Bruce A. Blonigen (Contact Author)

University of Oregon - Department of Economics ( email )

1285 University of Oregon
Eugene, OR 97403
United States
541-346-4680 (Phone)
541-346-1243 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Van Kolpin

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

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