Resource title

Agglomeration and endogenous absorptive capacities: hotelling revisited

Resource image

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Resource description

This paper proposes a theoretical model of spatial duopoly, where the location, on the one hand, and the absorptive capacity of rms as function of their internal R&D investment, on the other hand, endogenously determine the maximum level of knowledge spillovers rms might absorb. Our goal is to test whether this new modelling of spillovers a ects the traditional outcomes in terms of rms location choices . We solve a three-stage game, where rms choose their geo- graphical location, prior to their level of internal R&D expenditures, and nally compete in prices. We found that, at the optimum, rms choose the same level of internal R&D and set the same price, inde- pendently of their location. Moreover, rms locate symmetrically and tends to agglomerate in the center of the market as the transportation costs increase, knowledge spillovers being in that case maximum.

Resource author

Caroline Hussler, André Lorentz, Patrick Rondé

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25677

Resource license

Adapt according to the presented license agreement and reference the original author.