ISSN:
1573-6970
Keywords:
local public inputs
;
firm location
;
oligopoly
Source:
Springer Online Journal Archives 1860-2000
Topics:
Economics
Notes:
Abstract We develop a model in which two regional governments compete for a mobile oligopolistic firm by providing local public inputs. The central mechanism of our model is the interaction of an agglomeration advantage (partial nonrivalness of the local public inputs) and an agglomeration disadvantage (costs associated with the change of location of firms). We show that a central government of both regions induces an interregionally optimal allocation of firms by providing the optimal levels of local public inputs. The decentralized provision of local public inputs by regional governments, however, leads in most cases to a (interregionally) suboptimal allocation.
Type of Medium:
Electronic Resource
URL:
http://dx.doi.org/10.1007/BF00399909
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