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Geographic concentration and establishment size: analysis in an alternative economic geography model

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  • Thomas J. Holmes
  • John J. Stevens

Abstract

Big cities specialize in services rather than manufacturing. Big-city establishments in services are larger than the national average, whereas those in manufacturing are smaller. We propose an explanation of these and other related facts. The theory is developed in an economic geography model that is an alternative to the standard Dixit--Stiglitz structure. In our tractable structure, which has potentially wider application, firms have monopoly power in local markets but are price takers in export markets. Copyright 2004, Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Journal of Economic Geography.

Volume (Year): 4 (2004)
Issue (Month): 3 (June)
Pages: 227-250

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Handle: RePEc:oup:jecgeo:v:4:y:2004:i:3:p:227-250

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  1. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  2. Amiti, Mary, 1998. "Inter-industry trade in manufactures: Does country size matter?," Journal of International Economics, Elsevier, vol. 44(2), pages 231-255, April.
  3. Thomas J. Holmes & John J. Stevens, 2002. "The home market and the pattern of trade: round three," Finance and Economics Discussion Series 2002-23, Board of Governors of the Federal Reserve System (U.S.).
  4. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  5. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  6. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476, December.
  7. Bernard, Andrew B. & Bradford Jensen, J., 1999. "Exceptional exporter performance: cause, effect, or both?," Journal of International Economics, Elsevier, vol. 47(1), pages 1-25, February.
  8. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  9. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December.
  10. Thomas J. Holmes, 1999. "Scale of Local Production and City Size," American Economic Review, American Economic Association, vol. 89(2), pages 317-320, May.
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