Tuesday, April 17, 2012

19 April 2012: Spillovers, Absorptive Capacity and Agglomeration

Sergey Lychagin
Central European University

I study knowledge spillovers in an industry where rms are mobile and heterogeneous in their ability to adopt outside knowledge (absorptive capacity). I develop a static model of industry agglomeration where, in equilibrium, the force of attraction induced by spillovers is counteracted by the force of repulsion created by local competition. The model is applied to a sample of the US software firms. I estimate the structural parameters of the model and obtain the following results: (a) The data are consistent with highly localized knowledge spillovers; (b) The attraction force induced by spillovers creates a signifi cant sorting pattern placing rms with higher absorptive capacity in more agglomerated counties; (c) Ignoring rm heterogeneity in absorptive capacity leads to substantially biased estimates of gains from spillovers in policy experiments.

Date: April 19, 2012
Time: 03:00 P.M.

AMEX Conference Room (Second Floor)
Department of Economics,
Delhi School of Economics,
New Delhi-110007(INDIA)


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