Study Based On The Elasticity Of Substitution Between The Regions Of Industrial Clustering

In nowadays, industry agglomeration is an important phenomenon economic development. No matter around the world or in our country, the agglomeration of industry more and more becomes one of important factors of the promotion of any countries' economic development. The research on industry agglomeration is a hot problem in the fields of New Economic Geography, Industry Economics and Management. The research of the mechanism of industry agglomeration has important significance. for the reasonable of economic layout, the optimization of resource allocation, the formation of regional competition advantages and the establishment of space innovation system. The analysis of the formation mechanism of industry agglomeration is a premise for the analysis and research of industry agglomeration and an important link for the exploration of the law of the formation and development of industry agglomeration. In this paper, I make the research on the mechanism of industry agglomeration formation and the degree of the impact on agglomeration from the factors of agglomeration. From the perspective of elasticity of substitution among areas, I use the way of mainstream economics, try to apply Ramsay model to do the research of the space choice of enterprise, establish Ramsay model on space, extend consume elasticity of substitution on time to the elasticity of substitution of space choice. The optimal decision of space choice is to maximize the sum of value, which is convert by the consume value among different areas. The size of elasticity of substitution among areas decides to the proportion of the choice among areas. From the analysis of mathematical model, I make a sum of the factors of the elasticity of substitution among areas of industry agglomeration, for example, the expectation and the risk aversion of the enterprise, the provision of public goods in the center of agglomeration, policy and so on. I establish a linear regression model; use the data of electronic information industry of Shanghai, Jiangsu and Zhejiang, analyze the size of the elasticity of substitution, and the degree of the impact on industry agglomeration. The results show that the elasticity of substitution of electronic information industry among three countries is very small. It means that three countries have their own industry agglomeration, and develop well. This consists with the actual situation of three countries. Through the research, I have two conclusions. One aspect is that if we want to make an area have more effect of agglomeration than other areas, we should make this area have enough elasticity of substitution. In another word, if we want to make an area have notable effect of agglomeration, the key does not lie in the size of advantage of agglomeration, but lie in the factors of elasticity of substitution of industry agglomeration. Another aspect is that, it is possible that an industry format agglomerations in different areas and develop very well. From above, we can know that, the policy the promotion of the formation and development of industry agglomeration should pay attention on the increase of elasticity of substitution among areas and the efficiency of agglomeration. In another word, when the elasticity of substitution is very big, an area can achieve notable effect through small advantage of agglomeration.