A regional model of endogenous growth without scale assumptions

JournalSpatial Economic Analysis
AuthorsSteven Bond-Smith, Philip McCann, Les Oxley
PublishedNovember 2017
PublisherRoutledge Taylor and Francis Group
Number of Pages32

In this paper we model growth using a scale-neutral approach to innovation allowing differences between regions to emerge due to regional mechanisms. In this model, agglomeration is growth enhancing as the scale effect for innovation arises from greater access to knowledge rather than any assumed scale effects in growth-modelling techniques. Furthermore, entrepreneurs are assumed to choose the location of firms endogenously so as to minimize the costs of innovation, transport and living. The effects of such mechanisms are such that any policies that increase knowledge spillovers between locations will enhance growth and equality, but may be destabilizing for agglomeration.