The heterogeneous determinants of coagglomeration: a differenced perspective

Kristian Behrens () and Rachel Guillain ()
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Kristian Behrens: Université du Québec à Montréal (ESG-UQAM)
Rachel Guillain: Université Bourgogne Europe, LEDi UR7467

The Japanese Economic Review, 2025, vol. 76, issue 4, No 3, 794 pages

Abstract: Abstract The colocation patterns of industry pairs and the locations of their business functions—such as management, R&D, or production—have been considered mostly separately. We show that considering them jointly allows to better identify the determinants of agglomeration by exploiting heterogeneity across both industry pairs and business functions. While the coagglomeration of production is likely more sensitive to buyer-supplier links and labor market pooling, the coagglomeration of management and R&D is likely more sensitive to shared knowledge. We empirically document that industry pairs that share more knowledge colocate more their knowledge-intensive business functions, whereas industry pairs with stronger buyer-supplier links and a more similar workforce colocate more their production business functions. High transport costs lead to less coagglomeration, and input–output links and knowledge spillovers are more important when there are fewer multiunit firms.

Keywords: Coagglomeration; Business functions; Marshallian agglomeration forces; Transport costs; Microgeographic data (search for similar items in EconPapers)
JEL-codes: L60 R12 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s42973-025-00211-x

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