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Multiregional Firms and Region Switching in the US Manufacturing Sector

Antoine Gervais ()

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: This paper uses data on US manufacturing firms to study a new extensive margin, the reallocation of resources that takes place within surviving firms as they open and close establishments in different regions. To motivate the empirical analysis, I extend existing models of industry dynamics to include production-location decisions within firms. The empirical results provide support for the mechanisms emphasized by the theoretical model. In the data, only about 3 percent of firms make the same product in more than one region, but these multiregional firms are more productive on average compared to single-region firms, and they account for about two-thirds of output. The results also show that "region-switching" is pervasive among multiregional firms, is correlated with changes in firm characteristics, and leads to a more efficient allocation of resources within firms.

Keywords: Multiregional firms; firm heterogeneity; industry dynamics; monopolistic competition; proximity-concentration tradeoff. (search for similar items in EconPapers)
JEL-codes: L2 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2015-01
New Economics Papers: this item is included in nep-bec, nep-cse, nep-geo and nep-ind
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