There is substantial empirical evidence that innovation is geographically concentrated. Unlike what is generally assumed, however, it is not clear that localised knowledge spillovers provide a theoretically valid explanation for this. Studying spillovers of cost-reducing technology between...

Spatial spillovers and inter-dependencies among industries are often ignored in conventional production studies, despite substantial evidence suggesting their importance. Thick market or agglomeration effects may be associated with own-industry, supply-side, and demand-side spillovers. Our...