DISENTANGLING AGGLOMERATION ECONOMIES: AGENTS,SOURCES, AND SPATIAL DEPENDENCE*

ABSTRACT This paper expands the literature on agglomeration economies in three ways. It disentangles amenity and productivity effects of agglomeration; it decomposes aggregate scale effects into agglomeration factors of interest to policy makers; and it estimates own effects and spillovers to neighbors. It proposes a spatial simultaneous equations model in a spatial equilibrium framework with three agents—workers, consumers, and producers of traded‐goods and housing. Results for Ohio counties estimate economies resulting from population size, agglomeration causes, and public service quality and cost on each of the three agents in own and neighboring counties.     

DOES AGGLOMERATION MATTER EVERYWHERE?: NEW FIRM LOCATION DECISIONS IN RURAL AND URBAN MARKETS*

We test whether commonly used measures of agglomeration economies encourage new firm entry in both urban and rural markets. Using new firm location decisions in Iowa and North Carolina, we find that measured agglomeration economies increase the probability of new firm entry in both urban and rural areas. Firms are more likely to locate in markets with an existing cluster of firms in the same industry, with greater concentrations of upstream suppliers or downstream customers, and with a larger proportion of college‐educated workers in the local labor supply. Firms are less likely to enter markets with no incumbent firms in the sector or where production is concentrated in relatively few sectors. The same factors encourage both stand‐alone start‐ups and establishments built by multiplant firms. Commuting decisions exhibit the same pattern as new firm entry with workers commuting from low to high agglomeration markets. Because agglomeration economies are important for rural firm entry also, policies encouraging new firm entry should focus on relatively few job centers rather than encouraging new firm entry in every small town.     

Locational Equilibria in Weberian Agglomeration

A simple Weberian agglomeration is developed and then extended as an innovative fixed‐charged, colocation model over a large set of locational possibilities. The model is applied to cases in which external economies (EE) arise due to colocation alone and also cases in which EE arise due to city size. Solutions to the model are interpreted in the context of contemporary equilibrium analysis, which allows Weberian agglomeration to be interpreted in a more general way than in previous analyses. Within that context, the Nash points and Pareto efficient points in the location patterns derived in the model are shown to rarely coincide. The applications consider agglomeration from two perspectives: one is the colocation behavior of producers as the agents of agglomeration and the other is the interaction between government and those agents in the interest of agglomeration policy. Extending the analysis to games, potential Pareto efficiency and Hicks optimality are considered with respect to side payments between producers and with respect to appropriate government incentives toward agglomeration.     

区域旅游一体化的理论建构与战略设计——以京津冀为例

本文分析了区域旅游一体化的静态和动态经济效益,运用新经济地理学理论研究了区域旅游一体化效益的产生机制,并总结了区域旅游一体化的五种主要模式。以京津冀区域为典型案例,分析了京津冀旅游一体化的背景条件和主要举措,认为京津冀旅游一体化已进入中级阶段,在扩大旅游企业市场规模、串联旅游线路体系、获取内部规模经济和本地化经济等方面已取得长足进展,未来发展的重点应集中在获取城市化经济、鼓励旅游企业跨行政区合作、建立常设性旅游管理机构等方面。     

TRAFFIC CONGESTION,POLYCENTRICITY, AND INTRAURBAN FIRM LOCATION CHOICES: A NESTED LOGIT MODEL FOR THE LOS ANGELES METROPOLITAN AREA

This study empirically investigates traffic congestion effects on agglomeration through the lens of firm location decisions. A discrete choice model is applied to examine new establishments’ location choices within the Los Angeles metropolitan area. Employment centers are defined as the choice set to explore the nature and role of intraurban agglomerations. The results show that metro‐wide congestion negatively affects the location choices of firms in the high‐order office‐related activities, while local congestion have positive impacts on those firms’ location decisions. In contrast, firms in production‐related activities are positively influenced by regional congestion but are negatively affected by local congestion levels.     

上海陆家嘴金融集聚动因的实证研究

本文利用陆家嘴金融创新问卷调查和面对面访谈等实地调研资料,对上海陆家嘴的金融集聚动因进行了较为深入的探讨。研究发现,邻近金融中心市场、共享知名品牌、金融友善型政府、良好的政策法规是促进其金融集聚的主要动因;而我国金融政策环境开放度不高、金融产业水平较低、市场规模不大、中介服务机构不足则正成为影响陆家嘴金融集聚的主要不利因素。     

THE DETERMINANTS OF LOCALIZATION AND URBANIZATION ECONOMIES: EVIDENCE FROM THE LOCATION OF NEW FIRMS IN SPAIN

The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries. First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. Then, we regress these estimates on industry characteristics related to the potential importance of labor market pooling, input sharing, and knowledge spillovers. Urbanization effects are high in knowledge‐intensive industries, suggesting that firms locate in large cities to benefit from knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry‐specific, suggesting that industries locate in specialized economic environments to share a common pool of specialized workers.     

Why Do Suburban Offices Cluster?

The clustering of suburban office space in “office parks,” as well as the larger activity nodes of polycentric cities, has been widespread in recent years. The reasons for this clustering are not well understood, as the footloose nature of firms suggests a variety of patterns might evolve. This paper explores three traditional explanations: economies of scale in the supply of space, demands for access, and face-to-face contact needs of firms. Finding that those explanations do not completely explain the clustering pattern, an alternative explanation is considered, the demand for image or prestige.     

上海大都市区物联网产业集聚与空间演化

新兴技术产业的空间集聚与扩散对大都市区的空间结构有直接的影响,厘清新兴技术产业的空间分布和区位选择规律对新兴产业集群培育和大都市区空间结构调整都具有重要的政策意义。本文分析了上海市物联网企业的空间分布和集聚特征,结果发现初创期物联网企业在郊区集聚,随后向郊区其他区域扩散,并呈现出从单极向多极集聚转变的空间演化进程。通过构建负二项回归探究上海物联网企业的区位选择因素,结果表明制度因素和企业集聚效应对企业区位选择有重要影响。在产业发展初创期,企业区位选择受政府管制和市场机制双重影响,其中制度因素发挥了关键作用;而在随后的兴起期,产业集聚效应对新企业的入驻具有强大的吸引力。     

Transport Costs and Rural Development

Innovations that reduce costs of transport from rural locations may also reduce transport costs to rural areas. As transport costs fall, producers can afford to concentrate and achieve economies of scale. This paper explains an initially negative, but ultimately positive, relationship between reductions in transport costs and rural development. A two-region general equilibrium model with firm and worker spatial mobility highlights the firm and household location implications of costly transport-service use by both industry and agriculture in the context of scale economies and product differentiation. The computable general equilibrium model is initialized and verified with a bi-regional social accounting matrix and then used for simulations. Changes in relative transport costs are shown to affect relative regional wage rates, thus also determining the location of "production-cost-oriented" firms.     

Spatial Agglomeration of Manufacturing in Greece: Sectoral Patterns and Determinants

This article aims to demonstrate how the industry characteristics of manufacturing sectors affect the patterns of their spatial agglomeration. It also addresses several intricate issues concerning the measurement of localization economies and estimation of their main determinants in manufacturing industries. The original empirical analysis employs annual industrial data from the Hellenic Statistical Authority (ELSTAT) during the period 1993–2006 in Greece at the prefecture level, i.e. for 51 prefectures. The data processing reveals three important findings. The first is the temporal persistence of localization economies in the Greek manufacturing. The second refers to the high level of agglomeration associated with the high-technology industries as well as the resource- and scale-intensive industries. Lastly, there are significant effects of industry characteristics related to knowledge externalities, labour skills and productivity, scale economies and own-transport expenditure on spatial agglomeration, as resulted from the use of alternative geographic concentration indices and panel data models. Results obtained have implications for policy-makers, who can enhance the regional manufacturing activity by affecting these industry-specific factors. Amongst others, planning measures and policies which aim at promoting the local development and regional convergence should focus on reducing transport costs for firms or sectors, by improving the infrastructure capacity, interconnectivity and quality of services.     

SPATIAL IMPACTS OF AGGLOMERATION EXTERNALITIES*

ABSTRACT This article examines the extent to which agglomeration economies in one location affect employment growth and establishment births, using data from the Dutch province of South‐Holland. The data are of particular interest because they represent a census, rather than a sample, of all establishments and the location of establishments can be pinpointed to within 416 (postal) zip code areas averaging less than 6 km² in size. Results suggest that agglomeration economies positively affect employment growth and the location of new establishments, but with the possible exception of manufacturing, this effect dies out quickly with distance. Thus, the main finding is that for many industries, agglomerative forces may well operate at a geographic scale that is smaller than a city.     

Agglomeration Diseconomies of Traffic Congestion and Agglomeration Economies of Interaction in the Information-Oriented City

This paper presents a partial equilibrium model of land, labor, and transportation markets in an information-oriented city with traffic congestion of commuting and agglomeration economies of interaction. We derive the equilibria by numerical computations using specific utility, production, and congestion functions. The laissez-faire equilibrium is compared with the optimum. In contrast with the results of many previous papers, at the optimum the CBD becomes compact and the city more suburbanized than the laissez-faire equilibrium. We also analyze the effects of a Pigouvian tax system and subsidies on the spatial structure in the city.     

Stability of Spatial Equilibrium*

Abstract. Asymptotic stability of equilibrium is often difficult to know when the number of variables exceeds four, since all eigenvalues of the Jacobian matrix are not analytically solvable. However, we obtain stability conditions for a general class of migration dynamics without computing eigenvalues. We show that a spatial equilibrium is stable in the presence of strong congestion diseconomies, but unstable in the presence of strong agglomeration economies. We also show existence of a stable equilibrium in the case of negligible interregional externalities, which is applicable to club goods, local public goods, and new economic geography.     

Perceptions of office rent determinants by real estate brokerage firms in Istanbul

Studies on the office rent prediction models have been on the rise for the last quarter of this century. The extent of variables used in the proposed models changes significantly, reflecting variations in locational and/or economical conditions of the region. The viewpoint of brokerage firms on the effectiveness of these academically defined variables is important. The benefit of obtaining these viewpoints is two-fold. Firstly, it will provide some evidence on whether or not the reported influences of these variables remain the same in different markets, in this case, in the I˙stanbul office market. Secondly, it may define how well practitioners' criteria fit academically defined variables during the decision-making process for a new office investment, especially in the I˙stanbul office market. The study derives the currently well established locational, building, econometric and contract variables from previously published research. Two different influence scales of these variables were constructed. The first scale was based on the result of a survey study administrated to 10 leading real estate brokerage firms in I˙stanbul and the second was based on the reported influences from previous publications. Comparing the influence scales, contradictory and parallel findings were determined, indicative conclusions, revealing the unique structure of I˙stanbul, were drawn. Among the 47 comparable office rent variables, the influence of 17 was found to agree well in both scales. Except econometric variables, most variables in I˙stanbul revealed different influences than globally determined influences.     

RETAIL AMENITIES AND URBAN SPRAWL

This paper examines the interaction between local retail markets and population density in cities. We demonstrate that welfare costs of urban sprawl need not come only from road congestion or environmental externalities, as often suggested in the literature. A city also forgoes potential agglomeration economies in retail when it settles into a spatially sprawling equilibrium. Our theory predicts an additional spatial equilibrium where the city is inefficiently dense, characterized by strong retail agglomeration economies within the core.     

The Industrial District and the 'New' Italian Economic Geography

The industrial district is one of the theoretical concepts by which Italian economic geography has redefined a large part of its scientific and methodological status. The successful of industrial district is linked to the explanation of the Italian model of light industrialization, that is to the role played by small firms in Italian manufacturing industry. Nevertheless, it is worthwhile to know that industrial district was introduced as a theoretical paradigm to stress the territoriality of the production process and the gain of productiveness and innovativeness for the firm which sources from the embedding of economic activity within the local society where the production takes place. Support for this approach is found in the Marshallian external economies. This article addresses the importance of industrial district from the point of view of this neo-Marshallian reading of the organization of production. This framework of reference provides the basis for the formulation and implementation of local policies which recast traditional economic, social and infrastructural ones as specialist policies aimed at the creation of the institutional and environmental conditions for the competitiveness of places.     

Multi-Firm City Versus Company Town: A Micro Foundation Model of Localization Economies

When do we have a company town and when do we have a multi‐firm city? In this paper I analyze the impact of public infrastructure investment decisions on types of cities in a decentralized urban system. This is done in a one‐sector spatial general equilibrium model of a closed economy. Investment in public infrastructures reduces the fixed set up cost of all firms within the city resulting in multi‐firm cities. Thus, in this approach localization economies are modelled explicitly instead of assuming that larger industrial size within the city enhances productivity. On the other hand, when the infrastructure is not provided, a company town will be formed by a developer because of the fixed cost required by each firm. The decision of whether to invest in the provision of public infrastructures depends on the type of city that will provide households with the highest utility. This paper characterizes the conditions that lead to each of the two equilibrium configurations.     

The spatial extent of agglomeration economies across the wage earnings distribution

We investigate the spatial extent of agglomeration economies across the wage earnings distribution using economic mass (total employment) in four distance bands around each individual’s establishment in a quantile regression framework. We control for observable and unobservable individual and establishment characteristics. Remaining endogeneity in the model is assessed with a set of instrumental variables. Results indicate a positive effect of economic mass on wage earnings up to 25 km away from the establishment. The spatial extent of agglomeration economies is similar across the wage earnings distribution. However, increases in economic mass shift the wage earnings distribution in a nonsymmetric way.     

TESTING FOR CAUSALITY BETWEEN PRODUCTIVITY AND AGGLOMERATION ECONOMIES

ABSTRACT The productivity effects of agglomeration economies are often treated as endogenous in empirical work due to the potential for reverse causality. The extent to which these relationships are actually simultaneously determined, however, remains largely unobserved. This paper estimates panel data vector autoregressions for different sectors of the economy to test for bidirectional causality between productivity and both localization and urbanization economies. The aim is to address some key questions that will help to identify the extent of the endogeneity problem. Can we actually observe bidirectionality in the data? Does it feature more for some industries than for others? Is it more prevalent for localization or urbanization economies? The results show that agglomeration economies are not strictly unidirectional and that higher levels of productivity can induce growth in the scale of local urban and industrial environments. The paper discusses the difficulties that these issues pose for the estimation of agglomeration economies.