Patterns of technology, industry concentration, and productivity growth without scale effects

Colin Davis and Ken-ichi Hashimoto

Journal of Economic Dynamics and Control, 2014, vol. 40, issue C, 266-278

Abstract: This paper investigates the relationship between geographic patterns of industry and economic growth in a two-country model of trade with no scale effect, where productivity growth is generated by firm investment in process innovation. We find that dispersed equilibria with industry located in both countries produce higher growth rates than concentrated equilibria with all industry located in one country. The highest growth rate arises for equal industry shares and no productivity gap, implying that industry concentration has a negative effect on overall growth. Convergence towards a dispersed equilibrium is contingent on transport costs and knowledge dispersion.

Keywords: Industry concentration; Industry share; Productivity gap; Productivity growth; Scale effect (search for similar items in EconPapers)
JEL-codes: F43 O30 O40 R12 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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Working Paper: Patterns of Technology, Industry Concentration, and Productivity Growth Without Scale Effects (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:40:y:2014:i:c:p:266-278

DOI: 10.1016/j.jedc.2014.01.010

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