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Geographic concentration and vertical disintegration: Evidence from China

  • Li, Ben
  • Lu, Yi

Existing theoretical literature predicts that geographic concentration encourages vertical disintegration of firms. Nevertheless, empirical evidence of this prediction is limited, especially in developing countries. Using data on manufacturing firms from China, this paper documents a positive correlation between geographic concentration and vertical disintegration. Additionally, this paper uses the instrumental variable approach to address the issue of endogeneity and finds that geographic concentration has a positive causal effect on vertical disintegration.

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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 65 (2009)
Issue (Month): 3 (May)
Pages: 294-304

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Handle: RePEc:eee:juecon:v:65:y:2009:i:3:p:294-304
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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