Estimating Urban Agglomeration Economies for India: A New Economic Geography Perspective
AbstractThe main objective of this paper is to provide answer to an important question: Are Indian firms or industries in urban areas operating under decreasing returns to scale or increasing returns to scale? Scale economies are one of the main assumptions of new economic geography models that posit the formation of agglomeration economies. For this purpose, we use Kanemoto et al. (1996) model for estimation of aggregate production function and to derive the magnitude of scale economies. Using firm level data in 2004-05 from the Annual Survey of Industry, we find that urban firms in Indian industry operate under decreasing returns to scale.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 43501.
Date of creation: Dec 2012
Date of revision:
Economic geography; Urban agglomeration; Firm level analysis; Manufacturing industry; India;
Find related papers by JEL classification:
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-01-12 (All new papers)
- NEP-EFF-2013-01-12 (Efficiency & Productivity)
- NEP-URE-2013-01-12 (Urban & Real Estate Economics)
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