Networking Off Madison Avenue
AbstractThis paper examines the effect on productivity of having more near advertising agency neighbors and hence better opportunities for meetings and exchange within Manhattan. We will show that there is extremely rapid spatial decay in the benefits of having more near neighbors even in the close quarters of southern Manhattan, a finding that is new to the empirical literature and indicates our understanding of scale externalities is still very limited. The finding indicates that having a high density of commercial establishments is important in enhancing local productivity, an issue in Lucas and Rossi-Hansberg (2002), where within business district spatial decay of spillovers plays a key role. We will argue also that in Manhattan advertising agencies trade-off the higher rent costs of being in bigger clusters nearer “centers of action”, against the lower rent costs of operating on the “fringes” away from high concentrations of other agencies. Introducing the idea of trade-offs immediately suggests heterogeneity is involved. We will show that higher quality agencies are the ones willing to pay more rent to locate in greater size clusters, specifically because they benefit more from networking. While all this is an exploration of neighborhood and networking externalities, the findings relate to the economic anatomy of large metro areas like New Yorkthe nature of their buzz.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 05-15.
Length: 36 pages
Date of creation: Oct 2005
Date of revision:
Advertising; Agglomeration; Business Services; Discrete Choice; Knowledge Spillovers; Learning; Location Decision; Poisson Regression; Nested Logit;
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
- D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
- M37 - Business Administration and Business Economics; Marketing; Accounting - - Marketing and Advertising - - - Advertising
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-06-03 (All new papers)
- NEP-DCM-2006-06-03 (Discrete Choice Models)
- NEP-MKT-2006-06-03 (Marketing)
- NEP-URE-2006-06-03 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gilles Duranton & Henry Overman, 2002.
"Testing for Localisation Using Micro-Geographic Data,"
CEP Discussion Papers
dp0540, Centre for Economic Performance, LSE.
- Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
- Duranton, Gilles & Overman, Henry G., 2002. "Testing for Localization Using Micro-Geographic Data," CEPR Discussion Papers 3379, C.E.P.R. Discussion Papers.
- Duranton, Gilles & Henry G Overman, 2003. "Testing for Localisation Using Micro-Geographic Data," Royal Economic Society Annual Conference 2003 69, Royal Economic Society.
- Gilles Duranton & Henry G. Overman, 2002. "Testing for localisation using micro-geographic data," LSE Research Online Documents on Economics 20071, London School of Economics and Political Science, LSE Library.
- Gilles Duranton & Henry G. Overman, 2005. "Testing for localization using micro-geographic data," LSE Research Online Documents on Economics 581, London School of Economics and Political Science, LSE Library.
- 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.
- Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
- Ellison, G. & Glaeser, E.L., 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Working papers 94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
- Thomas J. Holmes, 2005. "The Location of Sales Offices and the Attraction of Cities," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 551-581, June.
- Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
- Patrick Bayer & Robert McMillan & Kim Rueben, 2005.
"Residential Segregation in General Equilibrium,"
NBER Working Papers
11095, National Bureau of Economic Research, Inc.
- Goyal, Sanjeev & Moraga-Gonzalez, Jose Luis, 2001.
RAND Journal of Economics,
The RAND Corporation, vol. 32(4), pages 686-707, Winter.
- Goyal, S. & Moraga-Gonzalez, J.L., 2000. "R&D Networks," Econometric Institute Research Papers EI 2000-26A, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
- Sanjeev Goyal & Jose Luis Moraga, 2000. "R&D Networks," Tinbergen Institute Discussion Papers 00-075/1, Tinbergen Institute.
- Frank Windmeijer & Joao Santos Silva, 1996.
"Endogeneity in count data models; an application to demand for health care,"
IFS Working Papers
W96/15, Institute for Fiscal Studies.
- Windmeijer, F A G & Silva, J M C Santos, 1997. "Endogeneity in Count Data Models: An Application to Demand for Health Care," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(3), pages 281-94, May-June.
- Matthew O. Jackson & Asher Wolinsky, 1994.
"A Strategic Model of Social and Economic Networks,"
1098, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- McMillen, Daniel P. & Singell, Larry Jr., 1992. "Work location, residence location, and the intraurban wage gradient," Journal of Urban Economics, Elsevier, vol. 32(2), pages 195-213, September.
- John Mullahy, 1997. "Instrumental-Variable Estimation Of Count Data Models: Applications To Models Of Cigarette Smoking Behavior," The Review of Economics and Statistics, MIT Press, vol. 79(4), pages 586-593, November.
- Steven T. Berry, 1994. "Estimating Discrete-Choice Models of Product Differentiation," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 242-262, Summer.
- Alvin J. Silk & Ernst R. Berndt, 1994. "Costs, Institutional Mobility Barriers, and Market Structure: Advertising Agencies as Multiproduct Firms," NBER Working Papers 4826, National Bureau of Economic Research, Inc.
- Stuart S. Rosenthal & William C. Strange, 1999.
"Geography, Industrial Organization, and Agglomeration,"
Center for Policy Research Working Papers
14, Center for Policy Research, Maxwell School, Syracuse University.
- Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 377-393, May.
- Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 56, Center for Policy Research, Maxwell School, Syracuse University.
- Jaffe, A.B. & Trajtenberg, M., 1992.
"Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations,"
14-92, Tel Aviv.
- Jaffe, Adam B & Trajtenberg, Manuel & Henderson, Rebecca, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 577-98, August.
- Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," NBER Working Papers 3993, National Bureau of Economic Research, Inc.
- Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July.
- Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," 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 49, pages 2119-2171 Elsevier.
- 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.
- Paulo Guimaraes & Octavio Figueiredo & Douglas Woodward, 2000.
"A tractable approach to the firm location decision problem,"
NIMA Working Papers
2, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
- Paulo Guimar�es & Octávio Figueirdo & Douglas Woodward, 2003. "A Tractable Approach to the Firm Location Decision Problem," The Review of Economics and Statistics, MIT Press, vol. 85(1), pages 201-204, February.
This item has more than 25 citations. To prevent cluttering this page, these citations are listed on a separate page. reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fariha Kamal).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.