Spatial Organization of Firms: Internal and External Agglomeration Economies and Location Choices Through the Value Chain

Juan Alcacer and Mercedes Delgado ()

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: We explore the impact of geographically bounded intra-firm spillovers (internal agglomeration economies) and geographically bounded inter-firm spillovers (external agglomeration economies) on firms’ location strategies. Using data from the Census Bureau’s Longitudinal Business Database and the U.S. Cluster Mapping Project, we analyze organic expansions of biopharmaceutical firms (by both new establishments and employment increase in existing establishments) in the U.S. in 1993-2005. We consider all activities in the value chain and allow location choices to vary by R&D, manufacturing, and sales. Our findings suggest that (1) internal and external agglomeration economies have separate, positive impacts on location, with relevant differences by activity; (2) internal economies of agglomeration arise within an activity (e.g., among plants) and across activities (e.g., between manufacturing and sales); (3) the effects of internal economies across and within activities vary by activity and type of organic expansion; and (4) across-activity internal economies are asymmetric.

Keywords: Location choices; agglomeration economies; value chain; organization theory (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-09
New Economics Papers: this item is included in nep-cse, nep-geo and nep-ure
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https://www2.census.gov/ces/wp/2012/CES-WP-12-33.pdf First version, 2012 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:12-33

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