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Is industry location persistent over time? Evidence from coagglomeration patterns between new and incumbent firms in Germany

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  • Falck, Oliver
  • Fritsch, Michael
  • Heblich, Stephan

Abstract

We test whether new firms locate close to incumbent firms of the same industry. Tendencies to coagglomerate may explain the general wisdom that industry location is highly persistent over time. We perform separate analysis for East and West Germany which enables us to study two integrated areas that have been characterized by different conditions in the period under study. A comparison of actual coagglomeration patterns with counterfactual patterns reveals that about 40 percent of the West German industries show coagglomeration patterns. In East Germany, coagglomeration between new and incumbent firms is prevalent in only 5 percent of the industries. The considerably lower degree of coagglomeration in East Germany may be due to a higher level of spatial reallocation within industries during the transformation from a socialist regime to a market economy.

Suggested Citation

  • Falck, Oliver & Fritsch, Michael & Heblich, Stephan, 2013. "Is industry location persistent over time? Evidence from coagglomeration patterns between new and incumbent firms in Germany," Munich Reprints in Economics 20512, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:20512
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    Cited by:

    1. Christian Ochsner, 2018. "Faktoren schnell wachsender Unternehmen – wo steht Ostdeutschland?," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 25(01), pages 10-16, February.
    2. Guido Buenstorf & Matthias Geissler & Stefan Krabel, 2016. "Locations of labor market entry by German university graduates: is (regional) beauty in the eye of the beholder?," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 36(1), pages 29-49, February.

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    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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