Location, technical change and labor migration in a heterogeneous industry

Document Type



Office of the Provost


Individual firms in an industry may exhibit differences in technical capabilities, economies of scale and size. These characteristics affect the firms' decisions regarding factor use and production location. This paper explores the relations among these decisions in a setting of a single interregional output market and segmented interregional labour markets. Firms are seen to react to changing labour- and output-market characteristics, changes that reflect earlier actions by other producers. Reactions are constrained by the technical capabilities and capital assets of individual firms, and by locational inertia based on the longevity of fixed capital stock. The overall system evolves as a result of factor-market response and the convergence of firm charactereristics on a limited number of viable types. These interactions are simulated, and the results are discussed in the light of studies of industrial organization and regional industrial change in the US.


This work was published before the author joined Aga Khan University.


Regional Studies