Estimation of semiparametric sorting models: Explaining geographical concentration of business services

Hans Koster, Jos van Ommeren () and Piet Rietveld

Regional Science and Urban Economics, 2014, vol. 44, issue C, 14-28

Abstract: We introduce a sorting model for firms where firm-specific profit coefficients can be identified given information on location choices of firms. It is shown that one may estimate such a model using a semiparametric Poisson approach. We apply this approach by examining the effects of specialization and diversity at the local level on profitability of business services firms. We find that, for most firms, profitability increases with specialization and decreases with diversity. In line with the literature, it is shown that specialization is particularly profitable for large and older firms, whereas diversity is relatively more profitable for smaller and younger firms.

Keywords: Sorting; Agglomeration economies; Specialization; Diversity; Heterogeneity; Semiparametric estimation (search for similar items in EconPapers)
JEL-codes: R12 R30 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:44:y:2014:i:c:p:14-28

DOI: 10.1016/j.regsciurbeco.2013.10.001

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