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Determinants of Firm Location: Empirical Evidence for France

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This paper analyzes the effects of local externalities on the probability of starting a new economic activity. We use firm-level data and geographic information on French zip-codes for 1993-2002. Poisson and Negative Binomial panel data models are estimated as they naturally allow for large sets of location choices with frequent zero outcomes and control for unobserved zip-code heterogeneity. To measure the geographic extent of location externalities we compute localization, urbanization and congestion variables for neighboring regions. We separately analyze the scale effects stemming from exporting and non-exporting firms. Our results show that agglomeration economies at zip-code level strongly effect the location decision of industrial establishments and find the presence of agglomeration shadows, one of the core predictions of the standard New Economic Geography formulations.

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File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP08-2008.pdf
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Bibliographic Info

Paper provided by Economics Section, The Graduate Institute of International Studies in its series IHEID Working Papers with number 08-2008.

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Length: 32
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:gii:giihei:heidwp08-2008

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Keywords: Firm Location; Agglomeration Economies; Agglomeration Shadows;

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  1. Arauzo Carod, Josep Maria & Manjón Antolín, Miguel C., 2001. "Firm Size and Geographical Aggregation: An Empirical Appraisal in Industrial Location," Working Papers 2072/1772, Universitat Rovira i Virgili, Department of Economics.
  2. Josep Maria Arauzo Carod, 2005. "Determinants of industrial location: An application for Catalan municipalities," Papers in Regional Science, Wiley Blackwell, vol. 84(1), pages 105-120, 03.
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