Agglomeration Premium and Trading Activity of Firms
AbstractFirms may benefit from proximity to each other due to the existence of several externalities. The productivity premia of firms located in agglomerated regions can be attributed to savings and gains from external economies. However, the capacity to absorb information may depend on activities of the firm, such as involvement in international trade. Importers, exporters and two-way traders are likely to employ a different bundle of resources and be organised differently so that they would appreciate inputs and information from other firms in a different fashion and intensity. Getting a better understanding of such external economies by looking at various types of firms is the focus of present paper. Using Hungarian manufacturing data from 1992-2003, we confirm that firms perform better in agglomerated areas and show that traders gain more in terms of productivity than non-traders when agglomeration rises. Firms that are stable participants of international trade gain 16 % in terms of total factor productivity growth as agglomeration doubles while non-traders may not benefit from agglomeration at all. Results also suggest that traders' productivity premium is most apparent in urbanised economies.
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Bibliographic InfoPaper provided by Center for Firms in the Global Economy in its series CeFiG Working Papers with number 11.
Date of creation: 28 Jan 2010
Date of revision: 28 Jan 2010
Other versions of this item:
- Békés, Gábor & Harasztosi, Péter, 2013. "Agglomeration premium and trading activity of firms," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 51-64.
- Gabor Bekes & Peter Harasztosi, 2010. "Agglomeration Premium and Trading Activity of Firms," IEHAS Discussion Papers 1001, Institute of Economics, Hungarian Academy of Sciences.
- F14 - International Economics - - Trade - - - Empirical Studies of Trade
- 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, Production Analysis, and Firm Location - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-13 (All new papers)
- NEP-EFF-2010-02-13 (Efficiency & Productivity)
- NEP-GEO-2010-02-13 (Economic Geography)
- NEP-INT-2010-02-13 (International Trade)
- NEP-TRA-2010-02-13 (Transition Economics)
- NEP-URE-2010-02-13 (Urban & Real Estate Economics)
You can help add them by filling out this form.
Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Agglomeration premium and trading activities of firms
by aamighini in NEP-INT blog on 2010-03-12 09:29:16
- Sun, Churen & Tian, Guoqiang & Zhang, Tao, 2011. "When Pareto meets Melitz: the inapplicability of the Melitz-Pareto model for Chinese firms," MPRA Paper 35597, University Library of Munich, Germany.
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