Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/170598
Authors: 
Colombo, Luca
Dawid, Herbert
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Dipartimento di Economia e Finanza (DISCE), Università Cattolica del Sacro Cuore 1
Abstract: 
This paper investigates firms' optimal location choices explicitly accounting for the role of inwards and outwards knowledge spillovers in a dynamic Cournot oligopoly with firms that are heterogeneous in their ability to carry out cost-reducing R\&D. Firms can either locate in an industrial cluster or in isolation. Technological spillovers are exchanged between the firms in the cluster. It is shown that a technological leader has an incentive to locate in isolation only if her advantage exceeds a certain threshold, which is increasing in firms' discount rate, in industry dispersion, and in the intensity of knowledge spillovers. Scenarios are identified where although it is optimal for the technological leader to locate in isolation, from a welfare perspective it would be desirable that she locates in the cluster.
Subjects: 
Location Choice
Knowledge Spillovers
Technological Leadership
Markov-perfect Equilibrium
JEL: 
L13
C73
O31
R12
Document Type: 
Working Paper

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