More similar firms — More similar regions? On the role of firm heterogeneity for agglomeration

Maximilian von Ehrlich and Tobias Seidel

Regional Science and Urban Economics, 2013, vol. 43, issue 3, 539-548

Abstract: In contrast to what several papers have argued recently, we show that firm heterogeneity fosters agglomeration of economic activity. If firms are more similar with respect to their total factor productivity, each company faces a lower propensity to export. This renders the home market more important speaking against agglomeration. We also relate changes in firm heterogeneity to technological progress which allows us to derive novel insights on the role of technology for the location of economicactivity.

Keywords: Firm heterogeneity; Agglomeration; Technological change; Trade; Labor mobility (search for similar items in EconPapers)
JEL-codes: F12 F22 R12 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: More Similar Firms - More Similar Regions? On the Role of Firm Heterogeneity for Agglomeration (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:43:y:2013:i:3:p:539-548

DOI: 10.1016/j.regsciurbeco.2013.02.007

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