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Knowledge Spillovers and Growth in the Disagglomeration of the Us Advertising-Agency Industry

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  • Charles King
  • Alvin J. Silk
  • Niels Ketelhöhn
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    Abstract

    We investigate knowledge spillovers and externalities in the disagglomeration and growth of the advertising-agency industry. A simple model of high demand, low wages, and externalities associated with clusters of related industries can explain the dispersion of advertising agency employment across states. Other factors affected the industry growth rate within states. Consistent with Jacobs and Porter but contrary to Marshall, Arrow, and Romer, competition, but not specialization, enhanced growth. In accord with Porter (1990), growth increased with buyer cluster size. Diversity had no effect on growth. Despite improvements in telecommunications and transportation reducing effective distances, location still matters. Copyright (c) 2003 Massachusetts Institute of Technology.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Journal of Economics & Management Strategy.

    Volume (Year): 12 (2003)
    Issue (Month): 3 (09)
    Pages: 327-362

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    Handle: RePEc:bla:jemstr:v:12:y:2003:i:3:p:327-362

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    Web page: http://www.kellogg.northwestern.edu/research/journals/JEMS/

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    Web: http://www.blackwellpublishing.com/journal.asp?ref=1058-6407&site=1

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    Cited by:
    1. Martijn J. Smit & Maria A. Abreu & Henri L.F. de Groot, 2010. "Micro-Evidence on the Determinants of Innovation in The Netherlands: The Relative Importance of Absorptive Capacity and Agglomeration Externalities," Tinbergen Institute Discussion Papers 10-060/3, Tinbergen Institute.
    2. Mohammad Arzaghi, 2005. "Quality Sorting and Networking: Evidence from the Advertising Agency Industry," Working Papers 05-16, Center for Economic Studies, U.S. Census Bureau.
    3. Henri L.F. de Groot & Jacques Poot & Martijn J. Smit, 2007. "Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis," Tinbergen Institute Discussion Papers 07-079/3, Tinbergen Institute.

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