Networks and Firm Location

José Pontes

No 2006/09, Working Papers Department of Economics from ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa

Abstract: This paper models the decision of vertically-linked firms to build either partitioned or connected networks of supply of an intermediate good. In each case, the locations of upstream and downstream firms are correlated. Input specificity is related both to variable costs (transport costs of the input) and fixed costs (learning costs of the use of the input). When both are low, a connected network emerges and a partitioned pattern arises in the opposite case. In the boundary region, there are multiple equilibria, either asymmetric (mixed network) or symmetric.

Keywords: Vertically-linked industries; Intermediate goods; Networks; Input flexibility. (search for similar items in EconPapers)
JEL-codes: L13 R30 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec, nep-com, nep-mic, nep-net and nep-soc
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Journal Article: Networks and firm location (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:ise:isegwp:wp92006

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