Strategic location choice under dynamic oligopolistic competition and spillovers

Luca Colombo and Herbert Dawid

Journal of Economic Dynamics and Control, 2014, vol. 48, issue C, 288-307

Abstract: This paper investigates firms׳ optimal location choices explicitly accounting for the role of inwards and outwards knowledge spillovers in a dynamic Cournot oligopoly with firms that are heterogeneous in their ability to carry out cost-reducing R&D. Firms can either locate in an industrial cluster or in isolation. Technological spillovers are exchanged between the firms located in the cluster. It is shown that a technological leader has an incentive to locate in isolation only if her advantage exceeds a certain threshold, which is increasing in firms׳ discount rate, in industry dispersion, and in the intensity of knowledge spillovers. Scenarios are identified where although it is optimal for the technological leader to locate in isolation, from a welfare perspective it would be desirable that she locates in the cluster.

Keywords: Location choice; Knowledge spillovers; Technological leadership; Markov-perfect equilibrium (search for similar items in EconPapers)
JEL-codes: C73 L13 O31 R12 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Related works:
Working Paper: Strategic Location Choice under Dynamic Oligopolistic Competition and Spillovers (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:48:y:2014:i:c:p:288-307

DOI: 10.1016/j.jedc.2014.05.018

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