The division of labor need not imply regional specialization

Samuli Leppälä and Pierre Desrochers

Journal of Economic Behavior & Organization, 2010, vol. 74, issue 1-2, 137-147

Abstract: The regional specialization of economic activities is generally deemed desirable for three reasons: (1) the law of comparative advantage; (2) localized economies of scale; and (3) knowledge spillovers. Taking a methodological individualist perspective, we claim that: (1) the law of comparative advantage, while valid for individuals and firms, does not necessarily imply regional specialization when regions are viewed as consisting of heterogeneous individuals; (2) localized economies of scale are seldom specific to one industry and external in all but the regional level; and (3) the study of knowledge spillovers is inconclusive and would benefit from a more disaggregated perspective.

Keywords: Regional; specialization; Comparative; advantage; Economies; of; scale; and; scope; Knowledge; spillovers (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:74:y:2010:i:1-2:p:137-147

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