Industrial Clusters: Equilibrium, Welfare and Policy
16 Pages Posted: 17 Nov 2004
There are 2 versions of this paper
Industrial Clusters: Equilibrium, Welfare and Policy
Abstract
This paper studies the size and number of industrial clusters that arise in a multi-country world in which one sector has a propensity to cluster because of increasing returns to scale. Equilibrium will generally have smaller clusters than the world welfare optimum, and possibly too many countries with a cluster. Countries have an incentive to use policy to attract an industrial cluster, but the equilibrium of the policy game between governments coincides with the world optimum so there is no "race to the bottom". Capping subsidy rates would lead to a proliferation of too many and too small clusters.
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Competing for Capital in a 'Lumpy' World
By Guttorm Schjelderup, Hans Jarle Kind, ...
-
Agglomeration and Tax Competition
By Rainald Borck and Michael Pflüger
-
A Simple, Analytically Solvable Chamberlinian Agglomeration Model
-
Firm Location Decisions, Regional Grants and Agglomeration Externalities
By Rachel Griffith, Michael P. Devereux, ...
-
Regional Specialization, Urban Hierarchy, and Commuting Costs