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

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Author Info
Thomas J. Holmes
John J. Stevens

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Abstract

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

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Paper provided by Board of Governors of the Federal Reserve System (U.S.) in its series Finance and Economics Discussion Series with number 2002-17.

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Date of creation: 2002
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Handle: RePEc:fip:fedgfe:2002-17

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Keywords: Regional economics ; Service industries;

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This paper has been announced in the following NEP Reports: References listed on IDEAS
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.:
  1. 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. [Downloadable!] (restricted)
  2. Thomas J. Holmes & John J. Stevens, 2002. "The home market and the pattern of trade: round three," Staff Report 304, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  3. 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. [Downloadable!] (restricted)
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  4. 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. [Downloadable!] (restricted)
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  5. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Thomas J. Holmes, 1999. "Scale of Local Production and City Size," American Economic Review, American Economic Association, vol. 89(2), pages 317-320, May. [Downloadable!] (restricted)
  7. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June. [Downloadable!] (restricted)
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  8. 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.
  9. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June. [Downloadable!] (restricted)
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  10. Amiti, Mary, 1998. "Inter-industry trade in manufactures: Does country size matter?," Journal of International Economics, Elsevier, vol. 44(2), pages 231-255, April. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
    Other versions:
  2. MION, Giordano, 2004. "Input-output linkages, proximity to final demand and the location of manufacturing industries," CORE Discussion Papers 2004053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE). [Downloadable!]
  3. Fabrice Defever, 2006. "Functional fragmentation and the location of multinational firms in the enlarged Europe," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00118808_v1, HAL. [Downloadable!]
  4. Octávio Figueiredo & Paulo Guimarães & Douglas Woodward, 2007. "Localization Economies and Establishment Scale: A Dartboard Approach," FEP Working Papers 247, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  5. Gene M. Grossman & Esteban Rossi-Hansberg, 2008. "Task Trade between Similar Countries," NBER Working Papers 14554, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Thomas J. Holmes & John J. Stevens, 2002. "The home market and the pattern of trade: round three," Staff Report 304, Federal Reserve Bank of Minneapolis. [Downloadable!]
    Other versions:
  7. Emek Basker, 2007. "When Good Instruments Go Bad," Working Papers 0706, Department of Economics, University of Missouri. [Downloadable!]
  8. Emek Basker, 2002. "Job Creation or Destruction? Labor-Market Effects of Wal-Mart Expansion," Working Papers 0215, Department of Economics, University of Missouri, revised 14 Jan 2004. [Downloadable!]
    Other versions:
  9. Alan Manning, 2008. "The Plant Size-Place Effect: Agglomeration and Monopsony in Labour Markets," Working Papers 1109, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  10. Fabrice Defever, 2006. "Functional fragmentation and the location of multinational firms in the enlarged Europe," Cahiers de la Maison des Sciences Economiques bla06052, Université Panthéon-Sorbonne (Paris 1). [Downloadable!]
    Other versions:
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