Increasing returns and economic geography.

"... Abstract: This handbook chapter studies the theoretical microfoundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discus ..."

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Abstract: This handbook chapter studies the theoretical microfoundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterisation of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modelling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications. Key words: cities, agglomeration, increasing returns, micro-foundations jel classification: r12, r13, r32 ∗ This is a working draft of a chapter written for eventual publication in the Handbook of Regional and Urban Economics, Volume 4, edited by J. Vernon Henderson and Jacques-François Thisse, to be published by North-Holland. We are grateful to the editors, Masa Fujita, Mike Peters, and the participants at the the 2002 narsa meetings for comments and suggestions.

A theory of urban growth,

by Duncan Black , Vernon Henderson - Journal of Political Economy , 1999

"... In an economy experiencing endogenous economic growth and exogenous population growth, we explore two main themes: how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization. Localized information spillovers promote agglomeration and human capital accu ..."

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In an economy experiencing endogenous economic growth and exogenous population growth, we explore two main themes: how urbanization affects efficiency of the growth process and how growth affects patterns of urbanization. Localized information spillovers promote agglomeration and human capital accumulation fosters endogenous growth. Individual city sizes grow with local human capital accumulation and knowledge spillovers; and city numbers generally increase, which we demonstrate is consistent with empirical evidence. We analyze whether local governments can successfully internalize local dynamic externalities. In addition, we explore how growth involves real income differences across city types and how urbanization can foster income inequality. Most nonagricultural production in developed countries occurs in metropolitan areas. The underlying reasons why economic activity agglomerates into cities-localized information and knowledge spillover-also make cities the engines of economic growth in an We gratefully acknowledge support of the National Science Foundation (grants SBR 9422440 and SBR9730142) for this research. The work has benefited from conversations with Harl Ryder on the dynamics of the model and from comments by Gilles Duranton and participants in seminars at Brown, Colorado, and Texas, Austin

Syndication networks and the spatial distribution of venture capital investments

by Olav Sorenson, Toby E. Stuart - American Journal of Sociology , 2001

"... Sociological investigations of economic exchange reveal how institutions and social structures shape transaction patterns among economic actors. This article explores how interfirm networks in the U.S. venture capital (VC) market affect spatial patterns of exchange. Evidence suggests that informatio ..."

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Sociological investigations of economic exchange reveal how institutions and social structures shape transaction patterns among economic actors. This article explores how interfirm networks in the U.S. venture capital (VC) market affect spatial patterns of exchange. Evidence suggests that information about potential investment opportunities generally circulates within geographic and industry spaces. In turn, the circumscribed flow of information within these spaces contributes to the geographic- and industry-localization of VC investments. Empirical analyses demonstrate that the social networks in the VC community—built up through the industry’s extensive use of syndicated investing—diffuse information across boundaries and therefore expand the spatial radius of exchange. Venture capitalists that build axial positions in the industry’s coinvestment network invest more frequently in spatially distant companies. Thus, variation in actors ’ positioning within the structure of the market appears to differentiate market participants ’ ability to overcome boundaries that otherwise would curtail exchange.

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Social distance and social decisions

by A. Akerlof, A. Akerlof - Econometrica , 1997

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Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at

Knowledge Networks as Channels and Conduits: The Effects of Spillovers in the Boston Biotechnology Community

by Jason Owen-Smith, Walter W. Powell , 2004

"... ..."

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Market Potential, Increasing Returns and Geographic Concentration,

by Gordon H Hanson , 1998

"... Abstract. In this paper, I examine the spatial correlation between wages and consumer purchasing power across U.S. counties to see whether regional demand linkages contribute to spatial agglomeration. First, I estimate a simple market-potential function, in which wages are associated with proximity ..."

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Abstract. In this paper, I examine the spatial correlation between wages and consumer purchasing power across U.S. counties to see whether regional demand linkages contribute to spatial agglomeration. First, I estimate a simple market-potential function, in which wages are associated with proximity to consumer markets. Second, I estimate an augmented market-potential function derived from the Krugman model of economic geography, parameter estimates for which reflect the importance of scale economies and transport costs. The estimation results suggest that demand linkages between regions are strong and growing over time, but quite limited in geographic scope. JEL Classification: F12, R12.

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Taxes and the location of production: evidence from a panel of US multinationals

by Michael P. Devereux, Rachel Griffith - Journal of Public Economics , 1998

"... This paper considers the factors that influence the locational decisions of multinational firms. A model in which firms produce differentiated products in imperfectly competitive markets is developed, in the spirit of Horstmann and Markusen (1992). Firms choose between a number of foreign locations; ..."

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This paper considers the factors that influence the locational decisions of multinational firms. A model in which firms produce differentiated products in imperfectly competitive markets is developed, in the spirit of Horstmann and Markusen (1992). Firms choose between a number of foreign locations; the outside options of exporting to or not serving the foreign market are explicitly modelled. Particular attention is paid to the impact of profit taxes; the separate roles of effective average and marginal tax rates are identified. The model is applied to a panel of US firms locating in the European market. Agglomeration effects are found to be important. The effective average tax rate plays a role in the choice between locations, but not in the choice of whether to locate production in Europe compared with one of the outside options. Ó 1998 Published by Elsevier Science S.A.

The Geography of Investment: Informed Trading and Asset Prices

by Joshua D. Coval, Tobias J. Moskowitz, Mark Grinblatt, Gur Huberman, Andrew Lo, John Mcconnell, Lubos Pastor - Journal of Political Economy

"... Applying a geographic lens to mutual fund performance, this study finds that fund managers earn substantial abnormal returns in nearby investments. These returns are particularly strong among funds that are small and old, focus on few holdings, and operate out of remote areas. Furthermore, we find t ..."

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Applying a geographic lens to mutual fund performance, this study finds that fund managers earn substantial abnormal returns in nearby investments. These returns are particularly strong among funds that are small and old, focus on few holdings, and operate out of remote areas. Furthermore, we find that while the average fund exhibits only a modest bias toward local stocks, certain funds strongly bias their holdings locally and exhibit even greater local performance. Finally, we demonstrate that the extent to which a firm is held by nearby investors is positively related to its future expected return. Our results suggest that investors trade local securities at an informational advan-tage and point toward a link between such trading and asset prices.

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Increasing returns and economic geography. (1991)

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