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The Effect of Local Demand on Industry Location

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  • Justman, Moshe

Abstract

This paper compares the geographic dispersion of employment in manufacturing industries across U.S. metropolitan areas with an imputed measure of local industry demand. The results indicate that local demand has significant long-term and short-term location effects in many industries, including some with negligible transportation costs. Variation in location patterns across industries indicates that demand-side agglomeration economies and technological intensity strengthen the pull of local demand, while supply-side economies of scale and agglomeration effects weaken it. Implications are discussed with regard to international trade, technological change, industrialization and development, urban and regional issues, and industrial organization. Copyright 1994 by MIT Press.

Suggested Citation

  • Justman, Moshe, 1994. "The Effect of Local Demand on Industry Location," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 742-753, November.
    • Handle: RePEc:tpr:restat:v:76:y:1994:i:4:p:742-53
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    Cited by:

    1. Marcel Bednarz & Tom Broekel, 2020. "Pulled or pushed? The spatial diffusion of wind energy between local demand and supply [Constructing regional advantage: platform policies based on related variety and differentiated knowledge base," Industrial and Corporate Change, Oxford University Press, vol. 29(4), pages 893-916.
    2. Theodore M. Crone, 1997. "Where have all the factory jobs gone - and why?," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 3-18.
    3. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    4. Davis, Donald R. & Weinstein, David E., 1999. "Economic geography and regional production structure: An empirical investigation," European Economic Review, Elsevier, vol. 43(2), pages 379-407, February.
    5. Brian P. Macfie, 2008. "The Impact Of Utility Deregulation In Arizona," Contemporary Economic Policy, Western Economic Association International, vol. 26(2), pages 335-350, April.
    6. James R. Markusen, 2021. "Putting per-capita income back into trade theory," World Scientific Book Chapters, in: BROADENING TRADE THEORY Incorporating Market Realities into Traditional Models, chapter 10, pages 187-197, World Scientific Publishing Co. Pte. Ltd..
    7. repec:hal:wpspec:info:hdl:2441/10191 is not listed on IDEAS
    8. Walz, Uwe, 1998. "Does an enlargement of a common market stimulate growth and convergence?," Journal of International Economics, Elsevier, vol. 45(2), pages 297-321, August.
    9. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669, Elsevier.
    10. Anke Kutschke & Alexandra Rese & Daniel Baier, 2016. "The Effects of Locational Factors on the Performance of Innovation Networks in the German Energy Sector," Sustainability, MDPI, vol. 8(12), pages 1-18, December.
    11. Nica, M., 2010. "Small Business Clusters in Oklahoma: MAR or Jacobs Effects?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 10(2).
    12. repec:spo:wpecon:info:hdl:2441/10191 is not listed on IDEAS
    13. Donald R. Davis & David E. Weinstein, 2001. "Market Size, Linkages, and Productivity: A Study of Japanese Regions," NBER Working Papers 8518, National Bureau of Economic Research, Inc.
    14. repec:hal:spmain:info:hdl:2441/10191 is not listed on IDEAS
    15. Gordon H. Hanson, 2000. "Scale Economies and the Geographic Concentration of Industry," NBER Working Papers 8013, National Bureau of Economic Research, Inc.
    16. Richard V. Adkisson & Comfort F. Ricketts, 2016. "Exploring the Redistribution of Manufacturing Employment Among the American States in the Face of Overall Declines in Employment," Economic Development Quarterly, , vol. 30(3), pages 215-231, August.
    17. Büttner, Thiess, 1997. "Externalities, location, and regional development: Evidence from German district data," Discussion Papers 43, University of Konstanz, Center for International Labor Economics (CILE).

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