The location quotient as an estimator of industrial concentration
AbstractWe construct the location quotient (LQ) from a discrete data generating process and formally test its statistical properties. First, we show that the LQ is typically unbiased, but exhibits finite sample bias when assuming a Poisson distribution. Second, we determine the accuracy of statistical tests, which depends of both sample size as well as desired confidence levels. After constructing LQs using County Business Patterns (2000) data, we find improved accuracy in statistical tests when one increases spatial as well as industrial aggregation. Results show a clear tradeoff between precise statistical inference and power in detecting industrial concentration.
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Bibliographic InfoArticle provided by Elsevier in its journal Regional Science and Urban Economics.
Volume (Year): 42 (2012)
Issue (Month): 4 ()
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Web page: http://www.elsevier.com/locate/regec
Location quotient; Industrial concentration;
Find related papers by JEL classification:
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
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