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Title:Location of R&D and high-tech production by vertically integrated multinationals PDF Logo
Authors:Ekholm, Karolina
Hakkala, Katariina
Issue Date:2003
Series/Report no.:SSE/EFI Working Paper Series in Economics and Finance 538
Abstract:We develop a two-country general equilibrium model where firms make separate choices about the location of R&D and high-tech production. There are two agglomeration forces: R&D spillovers and backward linkages associated with high-tech production. The latter tends to attract production to the larger economy. We show that, for relatively weak R&D spillovers and intermediate trade costs, the smaller economy tends to specialize in R&D. For certain parameterizations, both concentration and dispersion of R&D activities are possible outcomes. Hosting an agglomeration of R&D activities does not necessarily lead to welfare gains.
Subjects:monopolistic competition
R&D
high-tech production
agglomeration economies
JEL:F12
F23
Document Type:Working Paper
Appears in Collections:SSE/EFI Working Paper Series in Economics and Finance, EFI - The Economic Research Institute, Stockholm School of Economics

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