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Extra resources for Complex Evolutionary Dynamics in Urban-Regional and Ecologic-Economic Systems: From Catastrophe to Chaos and Beyond
Another is that there is effectively no theory of the firm arising from the Dixit– Stiglitz model. Free entry exists at all locations leading to “footloose cities” in principle, although variations of fixed or floating capital in the new economic geography models did come to be studied by Baldwin, Forslid, Martin, Ottaviano, and Robert-Nicoud (2003). But there remains no ability for firms to strategically interact Notes 41 with each other. The “myopic Chamberlinian firms” cannot engage in industrial strategies to “shore up their positions” (Neary, 2001, p.
Another is catastrophic agglomeration. This is simply the process that develops after a bifurcation point is passed that results in the endogenous asymmetry. Symmetry of even development across regions is broken, and there is a concentration of the industrial growth in one of the regions. Another is locational hysteresis. This is associated with the multiple equilibria arising from the tomahawk bifurcation. Once a bifurcation is passed and catastrophic agglomeration occurs, it is not so easily undone by a reversal of the underlying trends of parameter evolution.
And factories do not have a problem finding workers. Krugman (1993) emphasizes that this is a two-way street, with workers possessing the skill willing to work there even though the wages might be slightly lower because of the lower risk of losing a job. If the firm they work for closes, there are others to go to work for, as has been seen in Silicon Valley in California. (5) Industrial leadership, which “derives from an industrial atmosphere” that stimulates “more vitality than might have seemed probable in view of the incessant change of techniques” (Marshall, 1919, p.