Unpublished Paper
Regional industrial dominance, agglomeration economies, and manufacturing plant productivity.
Center for Economic Studies, United States Census Bureau
(2007)
Abstract
(earlier version of Regional Science and Urban Economics 2012, https://www.sciencedirect.com/journal/regional-science-and-urban-economics/vol/42/issue/1)
In a seminal article, Benjamin Chinitz (1961) focused attention on the effects that
industry size, structure, and economic diversification have on firm performance and regional
economies. He also raised a related but conceptually distinct question that has been overlooked
since: how does the extent to which a regional industry is concentrated in a single or small
number of firms impact the performance of other local firms within that industry? He suggested
that such regional industrial dominance may impact input prices, limit capital accessibility, deter
entrepreneurial activity, and reduce the regional availability of agglomeration economies such as
specialized labor and supply pools In this paper, we use an establishment-level production
function to quantify the links between industrial dominance, agglomeration economies, and firm
performance. We consider two questions. First, do greater levels of regional industrial
dominance lead to lower economic performance by small, dominated manufacturing plants?
Second, are small plants in dominated regional industries more limited in capturing regional
agglomeration benefits and therefore do they face rigidities in deploying production factors to
maximum advantage? Our results suggest that regional industrial organization does influence
productivity but that the effect tends to be a direct one, rather than an indirect effect via its
influence on agglomeration economies.
Keywords
- plant size,
- manufacturing,
- productivity,
- industrial structure,
- agglomeration
Disciplines
Publication Date
2007
Citation Information
Joshua Drucker and Edward Feser. "Regional industrial dominance, agglomeration economies, and manufacturing plant productivity." Center for Economic Studies, United States Census Bureau (2007) Available at: http://works.bepress.com/jdrucker/31/