Sectoral specialisation versus functional specialisation

Dan Pierce and Michael Perlberg

Journal of Economics and Econometrics, 2020, vol. 63, issue 3, 1-26

Abstract: We study the role of sectoral specialisation and functional specialisation in the growth and development of local economies. In our model with Ricardian efficiency differences and agglomeration economies, locations choose endogenously the degree of sectoral specialisation and functional specialisation. The sourcing of function inputs into a sector are geographically separated by a spatial transaction cost. Model-based simulations suggest that spatial transaction costs determine the level of sectoral specialisation and functional specialisation of locations.

Keywords: Sectoral specialisation; functional specialisation; Ricardian efficiency differences; agglomeration economies; spatial transaction cost (search for similar items in EconPapers)
JEL-codes: F12 F23 R11 R12 R13 (search for similar items in EconPapers)
Date: 2020
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