This paper addresses the issue of industrial development using a coordination game. Complementarities between transport infrastructure provision by the Government and consumer goods manufacturing firms, and among consumer goods firms themselves dictate the outcome: either the transport...

This paper models the location of two vertically related firms in a low labor cost country and in a country with a large market. The upstream industry is more labor intensive than the downstream industry. We find that spatial fragmentation occurs for low values of the input-output coefficient...