The Economic Rationale of Clusters and Cluster Policies

Gilles Duranton, Philippe Martin, Thierry Mayer and Florian Mayneris

in The Economics of Clusters

Published in print November 2010 | ISBN: 9780199592203
Published online January 2011 | e-ISBN: 9780191595615 | DOI:

Series: Studies of Policy Reform

The Economic Rationale of Clusters and Cluster Policies

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Cluster proponents and cluster policies are usually very vague about what they mean by clusters. This chapter starts from a well‐accepted definition of clusters by a major figure in this area, Michael Porter. The chapter then explores from a theoretical perspective what this definition implies for clusters. It shows that the assumptions typically made about clusters, which are often sensible empirically, lead to conclusions which are strongly at odds with existing policy recommendations. While the model used is arguably simple, it is also shown that reasonable refinements towards greater realism make the case for cluster policies even weaker.

Keywords: clusters; cluster development; policy; theory; local externalities

Chapter.  13307 words.  Illustrated.

Subjects: Financial Markets

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