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Regional industrial structure and agglomeration economies: An analysis of productivity in three manufacturing industries

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  • Economics

Abstract

We investigate whether a more concentrated regional industrial structure - the dominance of a few large firms in a given industry in a region - limits agglomeration economies and ultimately diminishes the economic performance of firms in that industry, especially small ones. In an application to three industries using establishment-level production functions and a combination of confidential and publicly available data sources, we find a consistently negative and substantial direct productivity effect associated with regional industrial structure concentration and only mixed and relatively weak evidence that agglomeration economies are a mediating factor in that effect. © 2011 Elsevier B.V.

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