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Externalities and Industrial Development

Authors
Journal
Journal of Urban Economics
0094-1190
Publisher
Elsevier
Publication Date
Volume
42
Issue
3
Identifiers
DOI: 10.1006/juec.1997.2036

Abstract

Abstract Using panel data for five capital goods industries, this paper estimates dynamic externalities. In contrast to previous studies, panel data allow separation of externalities from fixed effects and identification of a lag structure. I find strong evidence of Marshall–Arrow–Romer (MAR) (own industry, or localization) externalities. For Jacobs (urbanization) externalities effects are smaller. In terms of lag structure, for MAR externalities the biggest effects are typically from several years ago, but die out after six years. For urbanization phenomena, effects persist to the end of the time horizon of the data–eight or nine years back.

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