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Concentration, Agglomeration and the Size of Plants

Miren Lafourcade and Giordano Mion ()

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Abstract: This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data, we find, as in Kim [Kim, S., 1995. Expansion of markets and the geographic concentration of economic activities: the trends in U.S. regional manufacturing structure, 1860-1987, Quarterly Journal of Economics 110 (4), 881-908.], Holmes and Stevens [Holmes, T.J., and Stevens, J.J., 2002. Geographic concentration and establishment scale, Review of Economics and Statistics 84, 682-690.], and Holmes and Stevens [Holmes, T.J. and Stevens, J.J., 2004. Spatial distribution of economic activities in North America, in: J.V. Henderson and J.F. Thisse, eds., Handbook of Regional and Urban Economics, Vol.4, (Elsevier-North Holland, Amsterdam).], that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities.

Keywords: Concentration; Spatial auto-correlation; Heterogeneous firms (search for similar items in EconPapers)
Date: 2007-01
Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754253
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Published in Regional Science and Urban Economics, Elsevier, 2007, 37 (1), pp.46-68. 〈10.1016/j.regsciurbeco.2006.04.004〉

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00754253

DOI: 10.1016/j.regsciurbeco.2006.04.004

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