The Distribution of Firm Start-Up Size Across Geographic Space

David Audretsch and Jagannadha Tamvada

No 6846, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A growing body of literature shows that geographic location plays an important role in influencing economic phenomena. Despite the renewed interest in economic geography, the existing literature on the firm size distribution (FSD) has ignored the impact of geographic location. A wave of recent studies has examined the determinants and evolution of FSD (Cabral and Mata, 2003; Angelini and Generale 2008, AER) and a component of this literature has focused on the size of the new firm start-ups. However, while the impact of firm-specific and industry-specific characteristics on size of new firms has been analyzed, the role of geographic location has been largely neglected. Using Bayesian semi-parametric geoadditive models, we estimate geographic location as a micro-determinant of firm start-up size. The estimations based on a comprehensive database of firm start-ups in India suggest that the size distribution of new firms exhibits distinct regional patterns, even after controlling for firm and industry characteristics. These residual spatial patterns are found to be attributable, to some extent, to the level of economic and financial development in the regions.

Keywords: Bayesian methods; Developing countries; Firm size distribution; Geoadditive models; Geography; Start-up size (search for similar items in EconPapers)
JEL-codes: L11 L60 R12 (search for similar items in EconPapers)
Date: 2008-06
New Economics Papers: this item is included in nep-cwa, nep-ent, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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