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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

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Increasing Returns, Input-Output Linkages, and Technological Leapfrogging

Fredrik Gallo1

1Lund University, Sweden,

Citation Information: Topics in Economic Analysis & Policy. Volume 6, Issue 1, ISSN (Online) 1538-0653, DOI: 10.2202/1538-0653.1552, August 2006

Publication History

Published Online:
2006-08-18

Abstract

Firms agglomerate in one region due to increasing returns, input-output linkages and transportation costs. In the de-industrialised region factor prices are lower and a new technology may be profitable to adopt in that region instead, inducing a change in the technological leadership. This paper shows that the risk of locking in to an old technology is monotonically increasing in the benefits of agglomeration. Greater incompatibility between technologies also increases the risk of rejecting potentially superior manufacturing processes.

Keywords: agglomeration; lock-in; new economic geography; technological leapfrogging

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