How Industries Migrate When Agglomeration Economies Are Important

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Abstract

The economics of QWERTY suggests that historical accidents can trap economies in inefficient equilibria. This paper suggests that such accidents do not have the force that proponents claim. The paper presents a mechanism that may unravel a locational advantage caused by an historical accident. In the model, there are agglomeration benefits from concentrating industry in a particular location because it enables a large variety of local suppliers to emerge. Firms differ by the extent to which they purchase from local suppliers. Low-tier firms purchase little; high-tier firms purchase more. When the industry migrates, the lowest-tier products move first.

Original languageEnglish (US)
Pages (from-to)240-263
Number of pages24
JournalJournal of Urban Economics
Volume45
Issue number2
DOIs
StatePublished - Mar 1999

Bibliographical note

Copyright:
Copyright 2004 Elsevier Science B.V., Amsterdam. All rights reserved.

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