Industry characteristics and agglomeration of heterogeneous firms

Daguo Lv (), Lingyu Zhang (), Ren Lu () and Jingtao Yao ()
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Daguo Lv: Anhui University of Finance and Economics
Lingyu Zhang: Fujian College of Water Conservancy and Electric Power
Ren Lu: Guangdong University of Finance and Economics
Jingtao Yao: Henan Senyuan Group Co., Ltd.

Economia e Politica Industriale: Journal of Industrial and Business Economics, 2022, vol. 49, issue 1, No 2, 49 pages

Abstract: Abstract In this paper, we study the impact of two industry characteristics—relocation cost and market competition—on the location choice of firms with productivity heterogeneity between large market and small market. We find that only in industries with high relocation costs or fierce market competition, large markets are more attractive to high-productivity firms. We use Chinese firm data to test the predictions of the theoretical model, and the empirical results are consistent with the conclusions of the theoretical model.

Keywords: Heterogeneous firm; Productivity; Spatial selection; Relocation cost; Market competition (search for similar items in EconPapers)
JEL-codes: F12 F15 R12 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s40812-021-00206-w

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