Innovation through intra and inter-regional interaction in economic geography
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arXiv
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| Main Authors: | , |
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| Format: | Preprint |
| Published: |
2022
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| _version_ | 1866911839733940224 |
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| author | Gaspar, José M. Osawa, Minoru |
| author_facet | Gaspar, José M. Osawa, Minoru |
| contents | We develop a two-region economic geography model with vertical innovations that improve the quality of manufactured varieties produced in each region. The chance of innovation depends on the \emph{related variety}, i.e. the importance of interaction between researchers within the same region rather than across different regions. As economic integration increases from a low level, a higher related variety is associated with more agglomerated spatial configurations. However, if the interaction with foreign scientists is relatively more important for innovation, economic activities may (completely) re-disperse after an initial phase of agglomeration due to the increase in the relative importance of a higher chance of innovation in the less industrialized region. This non-monotonic relationship between economic integration and spatial imbalances may exhibit very diverse qualitative properties, not yet described in the literature. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2212_14475 |
| institution | arXiv |
| publishDate | 2022 |
| record_format | arxiv |
| spellingShingle | Innovation through intra and inter-regional interaction in economic geography Gaspar, José M. Osawa, Minoru Theoretical Economics We develop a two-region economic geography model with vertical innovations that improve the quality of manufactured varieties produced in each region. The chance of innovation depends on the \emph{related variety}, i.e. the importance of interaction between researchers within the same region rather than across different regions. As economic integration increases from a low level, a higher related variety is associated with more agglomerated spatial configurations. However, if the interaction with foreign scientists is relatively more important for innovation, economic activities may (completely) re-disperse after an initial phase of agglomeration due to the increase in the relative importance of a higher chance of innovation in the less industrialized region. This non-monotonic relationship between economic integration and spatial imbalances may exhibit very diverse qualitative properties, not yet described in the literature. |
| title | Innovation through intra and inter-regional interaction in economic geography |
| topic | Theoretical Economics |
| url | https://arxiv.org/abs/2212.14475 |