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Firm relocation and age-dependent reliance on agglomeration externalities

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  • Yoojin Yi

    (Seoul National University)

Abstract

This paper explores the age-dependent reliance on agglomeration externalities from a dynamic perspective by investigating the determinants of manufacturing establishments’ relocation decisions at the stages of the initial and the post-initial relocations. The relocation decisions are conceptually split into those on whether to relocate and where to relocate, specified by a nested-logistic model structure. The results indicate that manufacturing establishments’ preference to intra-industry agglomeration changes non-monotonically during their lifetime. While they prefer to stay in or move into municipalities characterized by the own-industry agglomeration in their initial relocation decision, they shun the intra-industry agglomeration in the stages of post-initial relocation. These findings suggest that to achieve the goal of industrial decentralization, policies to induce incumbent firms to relocate into rural areas could be more effective than those to attract start-up firms in peripheral area because they have lower dependence on agglomeration externalities.

Suggested Citation

  • Yoojin Yi, 2018. "Firm relocation and age-dependent reliance on agglomeration externalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 61(2), pages 439-456, September.
    • Handle: RePEc:spr:anresc:v:61:y:2018:i:2:d:10.1007_s00168-018-0875-4
    DOI: 10.1007/s00168-018-0875-4
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    More about this item

    JEL classification:

    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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