Labour pooling, labour poaching, and spatial clustering (original) (raw)

The spatial selection of heterogeneous firms

Journal of International Economics, 2010

We show that heterogeneous firms choose different locations in response to market integration. Specifically, decreasing trade costs lead to the gradual agglomeration of efficient firms in the larger country where they have access to a bigger pool of consumers. In contrast, high-cost firms seek protection against competition from efficient firms by locating in the smaller country. However, when the spatial separation of markets ceases to be a sufficient protection against foreign competition, high-cost firms choose to set up in the larger market. Hence, the relationship between economic integration and international productivity gap first increases and then decreases with market integration.

Agglomeration and Specialization Patterns when Firms and Workers are Footloose

Journal of Economic Integration, 2008

In new economic geography models, geographic concentration cant arise because of workers mobility or vertical linkages between firms. We examine a setup that combines those two approaches in conjunction with local congestion costs. We find that, as trade costs are lowered, the geographic concentration of total activity (agglomeration) follows an inverse u-shaped evolution, while the degree of specialization of regions increases. These results shed light on regional development within a country as integration proceeds: when trade costs are hight, firms evenly spread between the regions to supply local demand at low costs, hence diversified regions; at intermediate trade costs, we have coexistence of a diversified core and a specialized periphery and at low trade costs, each industry clusters in one region to fully exploit returns to scale externalities. US city centers and non-metropolitan areas during the period 1850-1990 depict such specialization and agglomeration patterns. These results show that a country's effort to miprove accessibility across its porfolio of places can favor a win-win regional allocation of firms based on each location's competitive advantage.

Agglomeration Effects and the Competition for Firms

SSRN Electronic Journal, 2003

Nousétudions un mondeà deux régions, chacune d'ellesétant habitée par un nombre donné mais différent de travailleurs immobiles. Un nombre donné de firmes mobiles choisissent d'opérer dans l'une ou l'autre région. Les firmes créent des emplois là où elles se localisent mais un certain niveau de chômage frictionnel persiste malgré tout. Des effets d'agglomération de deux types sont envisagés, soient leséconomies d'échelle dans l'appariement des travailleurs aux firmes et les externalité de production découlant de la présence d'autres firmes. Nousétudions le cas où les régions font partie d'unÉtat unitaire dans lequel le gouvernement central décide des politiques régionales. Nousétudions aussi le cas d'unÉtat fédéral dans lequel les gouvernements régionaux sont responsables des politiques régionales. Pour chacun des types d'État, nous caractérisons l'allocation des ressources et nous identifions les instruments de politiqueéconomique nécessaires a l'atteinte de l'optimum social.

Employees ’ Break-offs and the Birth of Industrial Clusters 1 In

2010

Empirical observation suggests that several industrial clusters originate from employees who break off and locate their new firms close to former employers. The reasons for such a choice are complex and include a variety of costs’ considerations. We present a two-player three-stage simultaneous game with interdependent decisions concerning break-offs, deterrent compensations, location, and profit maximizing production outputs. The structure of the game explains under what conditions a break-off is desirable, what location’s choice makes it optimal, and why the break-off process may lead to the birth of a cluster. We demonstrate how changes in a firm’s marginal production/congestion cost, the level of R&D investment in a region, and market size, all influence the likelihood of break-offs and their subsequent location decisions. Our results provide a rationale for why, in industries in which technology plays a significant role, an increase in R&D investment in the region may encourage...

Collusion, agglomeration, and heterogeneity of firms

Games and Economic Behavior, 2011

Friedman and Thisse (RAND Journal of Economics, 1993) show that spatial agglomeration appears in a standard two-stage location price model if the symmetric firms can collude in prices. We introduce a cost difference between two firms. We show that agglomeration never appears in a collusive equilibrium even when the cost difference between the firms is sufficiently small. JEL classification numbers: L13, R32, L41

Competition, matching, and geographical clustering at early stages of the industry life cycle

Journal of Economics and Business, 2004

We analyze the matching-based centripetal force leading to spatial clustering of firms within industries undergoing the early stages of their evolution. In these industries, the quality of the match between the characteristics of the inputs offered by suppliers and sought by assemblers' are uncertain. The model also incorporates the centrifugal force preventing spatial concentration of industry. The model shows that depending on the relative strength of the centripetal and the centrifugal forces of spatial distribution, the equilibrium outcome can be either concentration of all industry workers, suppliers and assemblers in one location or dispersion. We analyze the conditions, which determine the relative strength of the two forces.

Trade and industrial location with heterogeneous labor

We show in the context of a new economic geography model that when labor is heterogenous trade liberalization may lead to industrial agglomeration and inter-regional trade. Labor heterogeneity gives local monopoly power to firms but also introduces variations in the quality of the job match. Matches are likely to be better when there are more firms and workers in the local market, giving rise to an agglomeration force which can offset the forces against, trade costs and the erosion of monopoly power. We derive analytically a robust agglomeration equilibrium and illustrate its properties with numerical simulations.