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Equilibrium locations of vertically linked industries

Venables, Tony (1993) Equilibrium locations of vertically linked industries. CEP discussion paper, 137. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Abstract

This paper considers the locational choice of firms in an upstream and a downstream industry. Both industries are imperfectly competitive, with firms subject to increasing returns. There are transport costs between the two locations. Depending on the level of these costs there may be a single equilibrium with production diversified between locations, or multiple equilibria, some of which involve agglomeration at a single location. Typically the forces for agglomeration are greatest at intermediate levels of transport costs. Reducing these costs from a high to an intermediate level will cause agglomeration and consequent divergence of economic structure and income levels; reducing them to a low level may cause the industries to operate in both locations, bringing convergence of structure and income.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 1993 Anthony J. Venables
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 137
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/2177/

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