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The Determinants Of Localization And Urbanization Economies: Evidence From The Location Of New Firms In Spain

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  • Jordi Jofre-Monseny
  • Raquel Marín-López
  • Elisabet Viladecans-Marsal

Abstract

type="main"> The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries. First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. Then, we regress these estimates on industry characteristics related to the potential importance of labor market pooling, input sharing, and knowledge spillovers. Urbanization effects are high in knowledge-intensive industries, suggesting that firms locate in large cities to benefit from knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry-specific, suggesting that industries locate in specialized economic environments to share a common pool of specialized workers.

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  • Jordi Jofre-Monseny & Raquel Marín-López & Elisabet Viladecans-Marsal, 2014. "The Determinants Of Localization And Urbanization Economies: Evidence From The Location Of New Firms In Spain," Journal of Regional Science, Wiley Blackwell, vol. 54(2), pages 313-337, March.
  • Handle: RePEc:bla:jregsc:v:54:y:2014:i:2:p:313-337
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    2. Tianling Zhang & Panda Su & Hongbing Deng, 2021. "Does the Agglomeration of Producer Services and the Market Entry of Enterprises Promote Carbon Reduction? An Empirical Analysis of the Yangtze River Economic Belt," Sustainability, MDPI, vol. 13(24), pages 1-21, December.
    3. Richard E. Baldwin & Simon J. Evenett, 2015. "Value Creation And Trade In 21st Century Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 31-50, January.
    4. Daniel Puciato & Piotr Olesniewicz & Agnieszka Gawlik & Julita Markiewicz-Patkowska & Krzysztof Widawski & Teresa Slaby & Rafal Kasprzak & Barbara Mroz-Gorgon, 2019. "Location factors for budget, medium standard and luxury hotels based on the example of hotels operating in Poland," Operations Research and Decisions, Wroclaw University of Science Technology, Faculty of Management, vol. 1, pages 61-73.
    5. Iván Boal-San Miguel & Luis César Herrero-Prieto, 2020. "A Spatial–Temporal Analysis of Cultural and Creative Industries with Micro-Geographic Disaggregation," Sustainability, MDPI, vol. 12(16), pages 1-18, August.
    6. Coll Martínez, Eva, 2017. "Creativity and the City: Testing the Attenuation of Agglomeration Economies fo r the Creative Industries in Barcelona," Working Papers 2072/292435, Universitat Rovira i Virgili, Department of Economics.
    7. Neng Shen & Yuqing Zhao & Qunwei Wang, 2018. "Diversified Agglomeration, Specialized Agglomeration, and Emission Reduction Effect—A Nonlinear Test Based on Chinese City Data," Sustainability, MDPI, vol. 10(6), pages 1-22, June.
    8. Canfei He & Qi Guo & David Rigby, 2015. "Industry Relatedness, Agglomeration Externalities and Firm Survival in China," Papers in Evolutionary Economic Geography (PEEG) 1528, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Sep 2015.
    9. Eva Coll-Martínez, 2019. "Creativity and the city: testing the attenuation of agglomeration economies in Barcelona," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 43(3), pages 365-395, September.
    10. Laixiang Sun & In Hyeock Lee & Eunsuk Hong, 2017. "Does foreign direct investment stimulate new firm creation? In search of spillovers through industrial and geographical linkages," Small Business Economics, Springer, vol. 48(3), pages 613-631, March.
    11. Kristoffer Moeller, 2018. "Culturally clustered or in the cloud? How amenities drive firm location decision in Berlin," Journal of Regional Science, Wiley Blackwell, vol. 58(4), pages 728-758, September.
    12. Greta Falavigna & Roberto Ippoliti, 2018. "Industrial spatial dynamics, financial health and bankruptcy: evidence from Italian manufacturing industry," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(4), pages 533-554, December.
    13. Meihong Dai & Xianneng Li & Yuduo Lu, 2017. "How Urbanization Economies Impact TFP of R&D Performers: Evidence from China," Sustainability, MDPI, vol. 9(10), pages 1-17, September.

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