The unintended consequences of increasing returns to scale in geographical economics

Steven Bond-Smith

No WP1904, Bankwest Curtin Economics Centre Working Paper series from Bankwest Curtin Economics Centre (BCEC), Curtin Business School

Abstract: Increasing returns to scale is now fundamental to both economics and economic geography. But first generation theories of endogenous growth imply an empirically-refuted scale effect. This scale effect and assumptions to negate the scale effect both imply unintentional spatial consequences. A review of the broad economic geography literature reveals the widespread use and misuse of first generation and semi-endogenous growth techniques despite these distortions. Techniques are suggested for avoiding these unintended spatial consequences. Crucially, the scale-neutral Schumpeterian branch of endogenous growth theory enables research in economic geography to focus on the distinctly spatial mechanisms that define the spatial economy.

Keywords: endogenous growth; scale effects; increasing returns; innovation; economic geography (search for similar items in EconPapers)
JEL-codes: E10 L16 O41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-11
New Economics Papers: this item is included in nep-geo, nep-gro, nep-ind, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The unintended consequences of increasing returns to scale in geographical economics (2021)
Working Paper: The unintended consequences of increasing returns to scale in geographical economics (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ozl:bcecwp:wp1904

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