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Agglomeration Economies and the Built Environment: Evidence from Specialized Buildings and Anchor Tenants

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  • Liu, Crocker H.
  • Rosenthal, Stuart S.
  • Strange, William C.

Abstract

Previous work on agglomeration economies ignores the built environment. This paper shows that the built environment matters, especially for commercial sectors that dominate city centers. Buildings are specialized beyond random assignment, in part because externality-generating anchor tenants skew a building's other tenants towards the anchor's industry. An anchor elsewhere on the blockface has a much weaker effect, and one that is weaker still if across the street, suggesting rapidly attenuating agglomeration economies. Attenuation is pronounced for retail and information-oriented office industries but is absent for manufacturing. Building managers have incentives and capacities to partly internalize local externalities, contributing to urban productivity.

Suggested Citation

  • Liu, Crocker H. & Rosenthal, Stuart S. & Strange, William C., 2024. "Agglomeration Economies and the Built Environment: Evidence from Specialized Buildings and Anchor Tenants," Journal of Urban Economics, Elsevier, vol. 142(C).
    • Handle: RePEc:eee:juecon:v:142:y:2024:i:c:s0094119024000251
    DOI: 10.1016/j.jue.2024.103655
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    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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