Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/56338
Authors: 
Ekholm, Karolina
Hakkala, Katariina
Year of Publication: 
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

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