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Do neighboring municipalities matter in industrial location decisions? Empirical evidence from Spain

Angel Alañon-Pardo (), Patrick Walsh () and Rafael Myro ()
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Angel Alañon-Pardo: Universidad Complutense de Madrid

Authors registered in the RePEc Author Service: Angel Alañon Pardo ()

Empirical Economics, 2018, vol. 55, issue 3, No 10, 1145-1179

Abstract: Abstract This paper focuses on industrial location, assuming that entrepreneurs not only consider the advantages associated with a certain municipality, but also those coming from nearby areas. Exploratory analysis reflects the existence of spatial patterns in the creation of manufacturing establishments and sheds light on the geographical scope on which agglomeration economies operate in industrial location. Spatial Probit models and standard Probit models with spatially lagged explanatory variables are estimated to test whether neighboring municipalities’ location decisions and characteristics, including agglomeration economies, matter in industrial location choices. Results show that neighboring municipalities location decisions and characteristics help to explain location decisions of new establishments for 11 manufacturing industries in Spanish municipalities (NUTS V) over the period 1991–1995.

Keywords: Spatial location models; Geographical scope agglomeration economies (search for similar items in EconPapers)
JEL-codes: L6 R3 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00181-017-1307-5

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