Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89380
Authors: 
Bottazzi, Giulio
Dosi, Giovanni
Fagiolo, Giorgio
Secchi, Angelo
Year of Publication: 
2007
Series/Report no.: 
LEM Working Paper Series 2007/06
Abstract: 
In this paper we study a class of evolutionary models of industrial agglomeration with local positive feedbacks, which allow for a wide set of empirically-testable implications. Their roots rest in the Generalized Polya Urn framework. Here, however, we build on a birth-death process over a finite number of locations and a finite population of firms. The process of selection among production sites that are heterogeneous in their intrinsic attractiveness occurs under a regime of dynamic increasing returns depending on the number of firms already present in each location. The general model is presented together with a few examples of small economies which help to illustrate the properties of the model and characterize its asymptotic behavior. Finally, we discuss a number of empirical applications of our theoretical framework. The basic model, once taken to the data, is able to empirically disentangle the relative strength of technologically-specific agglomeration drivers (affecting differently firms belonging to different industrial sectors in each location) from site-specific geographical forces (horizontally acting upon all sectors in each location).
Subjects: 
Industrial Location
Agglomeration
Dynamic Increasing Returns
Markov Chains
Polya Urns
JEL: 
C1
L6
R1
Document Type: 
Working Paper

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