|
Abstract:
|
Abstract
We analyze firms’ incentives to cluster in an industrial district to benefit from
reciprocal technology spillovers. A simple model of cumulative innovation is presented
where technology spillovers arise endogenously through labor mobility. It is
shown that firms’ incentives to cluster are the strongest when the following three
conditions are met: 1) technological progress is rapid; 2) competition in the product
market is relatively soft; 3) the probability of a single firm to develop an innovation
is neither very high nor very low. We show that some trade secret protection is always
beneficial for firms’ profits and stimulates clustering. Excessive protection may
impede technology spillovers and reduce firms’ incentives to cluster.
JEL Codes: J3, K2, L1, O32, O34.
Keywords: Cumulative innovation, industrial districts, intellectual property rights,
technology spillovers. |
This work is licensed under a Creative Commons License.
