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Proximity and Economic Activity: An Analysis of Vendor‐University Transactions

Nathan Goldschlag, Julia Lane (), Bruce Weinberg and Nikolas Zolas

No 23018, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper using transaction based data to provide new insights into the link between the geographic proximity of businesses and associated economic activity. It contributes to the literature by developing both two new measures of distance and a set of stylized facts on the distances between observed transactions between vendors and customers for a research intensive sector – universities. We show that spending on research inputs is more likely to be expended at businesses physically closer to universities than those farther away. That relationship is stronger for High Tech and R&D performing businesses than businesses in general, which is consistent with theories emphasizing the role of tacit knowledge. We find that firms behave in a way that is consistent with the notion that propinquity is good for business: if a firm supplies a project at a university in a given year, it is more likely to open an establishment near that university in subsequent years than other firms. We also investigate the link between transactional distance and economic activity and show that when a vendor has been a supplier to a project at least one time, that vendor is subsequently more likely to be a vendor on the same or related project.

JEL-codes: O31 R1 (search for similar items in EconPapers)
Date: 2017-01
New Economics Papers: this item is included in nep-bec, nep-cse, nep-eur, nep-geo, nep-ino, nep-ppm and nep-ure
Note: LS PR
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Published as Nathan Goldschlag & Julia Lane & Bruce A. Weinberg & Nikolas Zolas, 2019. "Proximity and economic activity: An analysis of vendor-university transactions," Journal of Regional Science, vol 59(1), pages 163-182.

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