Abstract
This paper studies the mechanism of industry cluster and revisits two cases of the Cambridge phenomenon. Based on the theoretical study and numeric simulation, the paper finds that: first, knowledge spillovers destroy normal Hotelling Process and lead to regional industry cluster. The density of cluster is inversely related to the damping of knowledge spillovers. Industry cluster is more likely to appear when the production cost is closer but still below the price of the product. Second, smaller companies are more likely to cluster than larger ones. Third, there is an optimal spatial scale, which is primarily determined by workers’ wage, land rent, and the supply-demand relationship of land. The scale of a cluster cannot develop freely. Finally, labor-intensive firms and high-tech firms with less demand of land are more inclined to cluster, while traditional giant firms are less likely to do so.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Arrow KJ (1962) The economic implications of learning by doing. Rev Econ Stud 29: 155–173
Barro RJ, Sala-I-Martin X (1997) Technological diffusion, convergence, and growth. J Econ Growth 2: 1–27
Bernstein JI, Nadiri MI (1988) Interindustry R&D spillovers, rates of return, and production in high-tech industries. Am Econ Rev 78(2): 429–434
Borck R, Pflüger M (2006) Agglomeration and tax competition. Eur Econ Rev 50: 647–668
Caniëls MC, Verspagen B (2001) Barriers to knowledge spillovers and regional convergence in an evolutionary model. Evol Econ 11: 307–329
Capozza DR, van Order R (1989) Spatial competition with consistent conjectures. J Reg Sci 29: 1–13
Ciccone A (2002) Agglomeration effects in Europe. Eur Econ Rev 46: 213–227
Fujita M, Krugman P, Venables AJ (1999) The spatial economy: cities, regions and international trade. MIT Press, London
Goodfriend M, McDermott J (1995) Early development. Am Econ Rev 85: 116–133
Hotelling H (1929) Stability in conpetition. Econ J 39: 41–57
Krugman P (1991) History and industry location: the case of the manufacturing belt. Am Econ Rev 81: 80–83
Krugman P (1994) Complex landscapes in economic Geography. Complex Econ Theory 84: 412–416
Ku YL, Liau S-J, Hsing W-C (2005) The high-tech milieu and innovation-oriented development. Technovation 25: 145–153
Liu X, Wang Z, Zhao JY (2006) Government function in high-tech industry agglomeration: the case of Shenzhen. Sci Res Manag 27(4): 36–43
Lösch A (1954) The economics of location, Yale University Press, New Haven, (Lösch A, The sequence of spatial economics, translate by Wang Shouli, The commercial press of China)
Marshall A (1920) Trade and industry. MacMillan Press, London
Suedekum J (2006) Agglomeration and regional costs of living. J Reg Sci 46(3): 529–543
Porter ME (1998) Cluster and the new economics of competition. Harv Bus Rev 76(6): 77–90
Tveteras R (2006) Agglomeration externalities, productivity, and technical inefficiency. J Reg Sci 46(4): 605–625
Verspagen B (1992) Uneven growth between interdependent economies. Maastricht Press, Maastricht
von Thünen JH (1966) Der Isoloerte staat, 2nd edn. Gustav Fischer, Stuttgart
Wang Z, Ma C-F et al (2004) A study on temporal and regional process of knowledge spillover. Ann Reg Sci 38: 595–606
Wang Z, Mao KJ, Liu X, Zhao JY, Xie SL (2005) An analysis for location factors that cause industrial agglomeration. J Geogr Sci 60(4): 567–576
Wang Z, Deng Y et al (2002) Theoretical economic geography, chapter four. Science Press, Moscow
Wang Z, Zhao JY, Liu X, Mao KJ, Xie SL (2006) An analysis to the evolution law of high-tech industry in space and its factors. Stud Sci Sci 24(2): 227–232