Agglomeration, Vertical Specialization, and the Strength of Industrial Linkages

Jan Kranich

No 98, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: This paper picks up the seminal model of Venables (1996) and provides a quantifying concept for the sectoral coherence in vertical-linkage models of the New Economic Geography. Based upon an alternative approach to solve the model and to determine critical trade cost values, this paper focuses on the interdependencies between agglomeration, specialization and the strength of vertical linkages. A central concern is the idea of an ’industrial base,’ which is attracting linked industries but is persistent to relocation. As a main finding, the intermediate cost share and substitution elasticity basically determine the strength of linkages. Thus, these parameters affect how strong the industrial base responds to changes in trade costs, relative wages and market size.

Keywords: New Economic Geography; Vertical Linkages (search for similar items in EconPapers)
JEL-codes: F12 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008-09
New Economics Papers: this item is included in nep-geo, nep-int and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Agglomeration, vertical specialization, and the strength of industrial linkages (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lue:wpaper:98

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