World Scientic Publishing Company

ABSTRACT. Industrial clusters have received much attention in economic research in the last decade. They are seen as one of the reasons for the eco-nomic success of certain regions in comparison to others. This paper studies the evolution of such industrial clusters. To this end, a spatial structure of re-gions is set up and the entry, exit, and growth of rms within these regions is modelled and studied with the help of simulations. We are able to obtain some knowledge about the basic characteristics of this dynamic process and about the spatial relation between industries that results. It is shown that it matters whether one or the other industry appears rst and that location of clusters of one industry in uence the location of other industries. Furthermore, some necessary conditions for the evolution of industrial clusters are identied