Scandinavian Working Papers in Economics
Working Paper Series,
Research Institute of Industrial Economics
No 616: Location of R&D and High-Tech Production by Vertically Integrated Multinationals
Karolina Ekholm () and Katariina Hakkala ()
Additional contact information
Karolina Ekholm: Stockholm School of Economics, Postal: Department of Economics, P.O. Box 6501, SE-113 83 Stockholm, Sweden
Katariina Hakkala: The Research Institute of Industrial Economics, Postal: P.O. Box 55665, SE-102 15 Stockholm, Sweden
Abstract: This paper presents evidence that, in Europe, production of high-tech goods is attracted to large markets, while R&D activities tend to be located away from them. In order to explain this phenomenon, we develop a two-country general equilibrium model where firms make separate choices about the location of R&D and high-tech production. There are two agglomeration forces: R&D spillovers and a home-market effect creating incentives for firms to locate production in the relatively large market. We show that, for relatively weak R&D spillovers and intermediate trade costs, the smaller economy tends to specialize in R&D. We also discuss the welfare consequences of different outcomes with respect to the location of R&D, showing that while skilled labor may gain from hosting an agglomeration of R&D activities, unskilled labor will lose.
Keywords: Monopolistic Competition; R&D; High-Tech Production; Agglomeration Economies
48 pages, April 26, 2004
Full text files
WP616.pdf
Questions (including download problems) about the papers in this series should be directed to Elisabeth Gustafsson ()
Report other problems with accessing this service to Sune Karlsson ().
RePEc:hhs:iuiwop:0616This page generated on 2024-09-13 22:15:48.