Publication: Declining costs of communication and transportation: what are the effects on agglomerations?
Declining costs of communication and transportation: what are the effects on agglomerations?
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Gersbach, H., & Schmutzler, A. (2000). Declining costs of communication and transportation: what are the effects on agglomerations? European Economic Review, 44(9), 915–919. https://doi.org/10.1016/S0014-2921(99)00016-1
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We consider a two-stage model of locational choice. Firms decide in which of three locations (or countries) to build plants; they then compete in all three markets. Knowledge spillovers reduce marginal costs in agglomerations; through intra-firm spillovers these cost reductions can be exported to other locations. We show that improvements in the exchange of information within firms make agglomeration more likely, because knowledge obtained in the center can be transmitted to other locations more easily. Decreases in transportation cos
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Citations
Gersbach, H., & Schmutzler, A. (2000). Declining costs of communication and transportation: what are the effects on agglomerations? European Economic Review, 44(9), 915–919. https://doi.org/10.1016/S0014-2921(99)00016-1