Determinants of entry: Evidence from new manufacturing firms in the U.S

Yilin Dong

Growth and Change, 2020, vol. 51, issue 4, 1542-1561

Abstract: The objective of this paper is to estimate the relationship between agglomeration economies and the birth of new firms in U.S. manufacturing sectors during 2004–2012. I examine the variations in Marshallian factors across MSAs and across counties within MSAs. My findings support the existence of Marshallian agglomeration forces: input sharing, labor market pooling, and knowledge spillovers, with input–output linkages particularly important. I then examine the variations in Marshallian factors across regions and find regional differences are not very strong. In addition, large‐sized firms appear to be more responsive to a supplier‐customer relationship. Moreover, my empirical results provide evidence that firms in highly concentrated industries react more to input linkage and labor pooling.

Date: 2020
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