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Authors
Advisor(s)
Abstract(s)
This paper models, in game-theoretical terms, the location of two vertically-linked monopolistic firms in a spatial economy formed by a large, high labor cost country and a relatively small, low labor cost country. It is found that the decrease in transport costs shifts firms towards the low production cost country. This process takes two different forms: in labor-intensive industries it leads to spatial fragmentation; in industries with strong input-output relations, agglomerations are conserved, although they shift toward the low labor cost country.
Description
Keywords
Location Intermediate Goods Agglomeration Comparative Advantage
Pedagogical Context
Citation
Pontes, José Pedro. (2006). "Agglomeration and comparative advantage in vertically-related firms". Instituto Superior de Economia e Gestão - DE Working papers nº 17-2006/DE/UECE
Publisher
ISEG – Departamento de Economia