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Article
Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets
Journal of Regional Science
  • Georgeanne M. Artz, Iowa State University
  • Younjun Kim, University of Nebraska - Lincoln
  • Peter Orazem, Iowa State University
Document Type
Article
Publication Version
Submitted Manuscript
Publication Date
1-1-2016
DOI
10.1111/jors.12202
Abstract
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.
Comments

This is the peer reviewed version of the following article: Artz, G., Y. Kim and P. Orazem. 2016. “Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets” Journal of Regional Science, 56(1): 72-95, which has been published in final form at http://dx.doi.org/10.1111/jors.12202. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.

Copyright Owner
Wiley Periodicals, Inc.
Language
en
File Format
application/pdf
Citation Information
Georgeanne M. Artz, Younjun Kim and Peter Orazem. "Does agglomeration matter everywhere?: new firm location decisions in rural and urban markets" Journal of Regional Science Vol. 56 Iss. 1 (2016) p. 72 - 95
Available at: http://works.bepress.com/georgeanne-artz/31/