Bond-Smith, Steven Craig2012-10-092012-10-092012-04Bond-Smith, S. (2012). A regional model of endogenous growth with creative destruction. (Department of Economics Working Paper Series, Number 02/12). Hamilton, New Zealand: University of Waikato.https://hdl.handle.net/10289/6698We consider a two region growth model with vertical innovations where technical externalities in R&D lead to a technology leading region being the most attractive location for innovative firms. Innovations are produced in the form of quality improvements building on available knowledge and firms choose a technologically advanced location to maximise the productivity of R&D and maintain their niche monopoly. The partial nature of spillovers causes an additional force for agglomeration: the clustering effect. Agglomerated locations have the benefit of local inter-varietal knowledge spillovers for growth while peripheral locations depend on trade and regional knowledge spillovers.application/pdfen©2012 The Authorsendogenous growthnew economic geographyinnovationknowledge spilloversagglomerationquality ladderscreative destructionWorking Paper