Koen Frenken

Section of Economic Geography, Faculty of Geosciences, Utrecht University, NL


14:00 - 15:30 Invited talk: Koen Frenken:
A theoretical framework for Evolutionary Economic Geography

15:30 - 16:00 Break

16:00 - 16:20 Michael König:
Dynamic Innovation Networks

16:20 - 16:40 Markus Geipel:
Industry Organization and Efficiency

16:40 - 17:00 Break

17:00 - 18:30 Invited talk: Giorgio Fagiolo:
Sectoral and Geographical Specificities in the Spatial Structure of Economic Activities

Date/Time: Wednesday, 14 March 2007, 14:00 - 18:30
Place: ETH Zentrum, ZUE G1


SG_Symposium: Issues in Economic Geography

A theoretical framework for Evolutionary Economic Geography

We propose an evolutionary framework based on stochastic growth that is sufficiently general to investigate systematically a number of stylised facts in economic geography, while at the same time sufficiently flexible to be applied in more specific industry and territorial contexts. We view economic development as a branching process generating an ever-increasing variety of products in the economy. Assuming that firms grow by diversification through product innovations, firm size and city size distributions can be derived as two aggregates resulting from a single evolutionary process. Gains from variety at the firm level and the urban level provide the central feedback mechanisms in economic development generating strong path dependencies in the spatial concentration of industries and the industrial specialisation of cities.

Giorgio Fagiolo

Laboratory of Economics and Management, Sant'Anna School of Advanced Studies, Pisa, Italy

Sectoral and Geographical Specificities in the Spatial Structure of Economic Activities

This work explores the spatial structure of location of production activities. We try to disentangle location- fromsector-specific drivers in the dynamic process of spatial
agglomeration. The former typically apply ``horizontally'' (i.e. across all industrial sectors), while the latter unfold in the form of non-decreasing dynamic returns to the current stock of installed business units. A stochastic model of location is developed and three different specifications are tested against Italian data on the location of manufacturing firms. Our results suggest that different locations exert different structural influences on the distribution of production activities. Moreover, a widespread horizontal power of ``urbanization'', which makes particular locations more attractive irrespectively of the sector, does emerge. However, after controlling for the latter, one is still left with sector-specific forms of dynamic increasing returns to agglomeration, which vary a lot across different manufacturing activities.


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Markus Michael Geipel

Chair of Systems Design, ETH Zurich

Industry Organization and Efficiency

In this talk we discuss the effects of industrial organization (markets versus integrated firms) for industry efficiency. The model takes the complexity and modularity of the production process as the independent variable. By comparing the performance of integrated versus disintegrated modes of industry organization, we shed light on the conditions under which (dis)integration pays. In line with conventional wisdom, (nearly) modular production processes befit disintegrated organizational forms while very interdependent ones call for greater integration. However, disintegration in itself is not guaranteed to lead to greater product differentiation unless competition and selection are introduced. A brief case study supporting the findings of the model will be provided.

Michael König

Chair of Systems Design, ETH Zurich

Dynamic Innovation Networks

We study the emergence and stability of knowledge exchange networks with either bilateral or unilateral interactions. We will mainly focus on the exchange of knowledge 
but the results of this work can be generalized to any social system where market failures are dominant and networks of exchange are indeed observed. Bilateral knowledge exchange can be understood as a market exchange or trading of knowledge, which is possible if intellectual property rights (IPR)[Merges, 1999] or a reputation mechanism [Fehr and Schmidt, 1999, Nowak and Sigmund, 2005] can be maintained. Unilateral knowledge exchange is an instantaneous giving away of knowledge from one firm to another where the net effect of this action is evaluated at a later point in time (expiration time). In circumstances in which it is hard to guarantee IPR and firms have only limited information about other firms the latter mechanism may be the only possibility to generate and diffuse knowledge at all.