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Title: R&D and Strategic Industrial Location in International Oligopolies

Author(s): Armando José Garcia Pires

Publication Date: March 2006

Keyword(s): agglomeration effects, asymmetric firms, industrial location, oligopoly and R&D investment

Programme Area(s): International Trade and Regional Economics

Abstract: In a spatial economy where oligopolist firms compete in R&D, it is found that geography affects the innovative behaviour of firms. Notably, international differences in market size conduce to endogenous asymmetries between firms given that firms located in the country with more demand have stronger incentives to invest in R&D. This 'R&D linkage' between demand and competitiveness promotes firms to strategically delocalize to the larger country. As a result, a spatial equilibrium arises with only total or partial agglomeration, but never with symmetric dispersion.

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Bibliographic Reference

Garcia Pires, A. 2006. 'R&D and Strategic Industrial Location in International Oligopolies'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5582