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Increasing Returns, Input-Output Linkages, and Technological Leapfrogging

Fredrik Gallo ()

No 2005:22, Working Papers from Lund University, Department of Economics

Abstract: Firms agglomerate in one region due to increasing returns, input-output linkages and transportation costs. In the de-industrialised region factor prices are lower and a new technology may be profitable to adopt in that region instead, inducing a change in the technological leadership. This paper shows that the risk of locking in to an old technology is monotonically increasing in the benefits of agglomeration. Greater incompatibility between technologies also increases the risk of rejecting potentially superior manufacturing processes.

Keywords: agglomeration; lock-in; new economic geography; technological leapfrogging (search for similar items in EconPapers)
JEL-codes: F12 F43 O33 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2005-03-11, Revised 2006-07-19
New Economics Papers: this item is included in nep-dev, nep-eff and nep-mic
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Published in Topics in Economic Analysis & Policy, 2006.

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