Spatial externalities, R&D spillovers, and endogenous technological change

Spyridon Tsangaris, Anastasios Xepapadeas, Athanasios N. Yannacopoulos and Luca Salvati

Regional Science and Urban Economics, 2024, vol. 109, issue C

Abstract: Forward-looking economic agents operating in a finite continuous geographic area choose how much to innovate at each point in time and space. Based on this assumption, the present study incorporates spatial interactions in endogenous growth models, addressing the criticism that such models are inconsistent with empirical evidence. More specifically, we introduce spatial production spillovers, knowledge diffusion across space, and the capability for spatial heterogeneity into a standard expanding variety growth model based on R&D. We study the properties of equilibrium and optimal allocations and argue that the characteristics are different from those of the non-spatial model, which alter the appropriate policy measures. Finally, we provide numerical examples demonstrating the importance of spatial dependent policy measures in achieving a balanced regional development.

Keywords: Agglomeration; Endogenous growth; Knowledge diffusion; Spatial development; Spatial externalities (search for similar items in EconPapers)
JEL-codes: C61 O33 O41 R10 R32 (search for similar items in EconPapers)
Date: 2024
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Working Paper: Spatial externalities, R&D spillovers, and endogenous technological change (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:109:y:2024:i:c:s0166046224000863

DOI: 10.1016/j.regsciurbeco.2024.104055

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