Adjustment Costs and Long Run Spatial Agglomerations
Anastasios Xepapadeas () and
No 1327, DEOS Working Papers from Athens University of Economics and Business
We introduce knowledge spillovers as an externality in the production function of competitive Ãƒï¿½Ã¯Â¿Â½firms operating in a Ãƒï¿½Ã¯Â¿Â½nite spatial domain under adjustment costs. Spillovers are spatial as productive knowledge Ãƒï¿½Ã¯Â¿Â½flows more easily among firms located nearby. When knowledge spillovers are not internalized by Ãƒï¿½Ã¯Â¿Â½firms spatial agglomerations may emerge endogenously in a competitive equilibrium, however, they do not emerge at the steady state of the social optimum.
Keywords: Investment theory; adjustment costs; spatial agglomerations (search for similar items in EconPapers)
JEL-codes: D21 R3 C61 (search for similar items in EconPapers)
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Working Paper: Adjustment Costs and Long Run Spatial Agglomerations (2013)
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