A BEJEAP Topics article.

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.

Submitted: December 30, 2005 · Accepted: July 10, 2006 · Published: August 18, 2006

Originally published in Topics in Economic Analysis & Policy.

Recommended Citation

Gallo, Fredrik (2006) "Increasing Returns, Input-Output Linkages, and Technological Leapfrogging," Topics in Economic Analysis & Policy: Vol. 6 : Iss. 1, Article 13.
Available at: http://www.bepress.com/bejeap/topics/vol6/iss1/art13