PRODUCTION TECHNOLOGY UNCERTAINTY AND THE OPTIMAL LOCATION OF THE FIRM*

ABSTRACT This paper investigates the implication of production-technology uncertainty for the exclusion theorem. The paper presents the result that the risk-averse firm facing production technology uncertainty prefers an intermediate location to avoid risk under certain conditions. The firm chooses an intermediate location (over a corner location) particularly if its degree of risk aversion overwhelms the inherent convexity of profit with respect to location. The latter depends, in turn, on the structure of production technology characterized by the elasticity of substitution and returns to scale parameters.     

Fostering place-based innovation and internationalization – the new turn in German technology policy

Since the mid-1990s German technology policy has experienced a paradigmatic shift from standard grant schemes towards a region-oriented and competition-based R&D policy. Currently, a new policy experiment, the InterClust contest, is under way, trying to simultaneously foster place-based innovation, R&D internationalization and the internationalization of innovative places. The current paper analyses the new policy, relating it to the recent literatures on heterogeneous firms and on cluster-life cycles, and presents results from a firm survey performed in 21 winner regions of InterClust. Findings show that the new funding scheme takes insights from recent theoretical developments into account and addresses important impediments to firm and cluster internationalization. Although it is too early for an overall assessment, it is argued that the long-term impact will critically depend on the inflow of heterogeneous knowledge and the strength of intra-regional mobilization effects.     

Traditions and transitions in Korean bronze technology

Metallurgical examination of Korean bronze artifacts shows that a technical tradition based on casting and use of leaded high-tin alloys was established in Korea at the early stages of bronze use. After the subsequent discovery of quenching methods that suppress formation of the brittle δ phase, new thermo-mechanical techniques were introduced between the 7th and 10th centuries AD. Lead-free alloys were used, and tin contents near that of the peritectic point in the Cu–Sn phase diagram were chosen. Leaded high tin alloys continued in use, but only in cast objects, and with significant composition variation. The unique conditions during the time of innovation suggest that the transition to new metallurgical techniques was gradually achieved through domestic technical innovation inspired by external influences.     

Transitions in cast iron technology of the nomads in Mongolia

Metallurgical study of seven cast iron artifacts recovered from sites of the former Xiongnu (BC 3rd to AD 1st), Turk (AD 6th to 8th), Khitan (AD 10th to 12th), and Mongolian empires (AD 12th to 15th) shows that the earlier Xiongnu and Turk artifacts were made of cast iron alloys of near eutectic composition. The later Khitan and Mongol objects had greatly reduced carbon content in the range of ultrahigh carbon steel rather than cast iron, and contained more than 0.5 mass % silicon as an alloying element. Inclusions high in sulfur, phosphorus or silicon are also present. These differences suggest that Mongolia experienced a technical transition a few centuries before the establishment of the Mongolian empire, which is in agreement with some written accounts. The microstructures of the cast iron artifacts are compared with the related archaeological and documentary evidence. The results suggest that the use of fossil coal in smelting and the state policy of controlling iron production were the major factors responsible for the transition.