Comments on: Mike Munger on Specialization

By: Rossle

Rossle — Thu, 07 Jan 2016 16:27:44 +0000

Perhaps a quick Wikipedia skim or a review of Krugman’s work would help.

https://www.princeton.edu/~pkrugman/scale_econ.pdf

https://en.wikipedia.org/wiki/New_trade_theory

http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2008/krugman-lecture.html

By: Slocum

Slocum — Thu, 07 Jan 2016 00:56:20 +0000

Hmmm. I understood Krugman was talking about economies of scale (as in manufacturing) rather than path dependence and network effects. Economies of scale could explain how we ended up with just the Big 3 auto companies, but can it explain the concentration of tech startup activity in Silicon Valley?

By: Arnold Kling

Arnold Kling — Thu, 07 Jan 2016 00:35:54 +0000

You know, of course, that Paul Krugman’s Nobel Prize was for making the point you just made.

By: Andrew'

Andrew' — Wed, 06 Jan 2016 21:55:34 +0000

So if motor city was an early analog to the Chinese scale clustering that is touted as a competitive advantage, cetera paribus, that may have certain implications.

By: Slocum

Slocum — Wed, 06 Jan 2016 16:42:09 +0000

I had always assumed that comparative advantage was at least as much about chance and first-mover advantages as it was about climate and location (or even culture generally). So there’s no particular reason why a given industry should end up concentrated in particular region (computers in Silicon Valley, autos in Detroit) rather than other places that had similar advantages — no reason except happenstance. In the early days, hundreds of auto companies were founded and autos were manufactured all over the US. But Henry Ford built his company in SE Michigan.