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R&D and Strategic Industrial Location in International Oligopolies

In a spatial economy where oligopolist firms compete in R&D, it is found that geography affects the innovative behaviour of firms, according to the authors. This R&D linkage between demand and competitiveness promotes firms to strategically delocalize to the larger country. As a result, a spatial equilibrium arises with only total or partial agglomeration, but never with symmetric dispersion.

Geography