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Industrial agglomeration and firm size: Evidence from China

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  • Li, Dongya
  • Lu, Yi
  • Wu, Mingqin

Abstract

This paper, by using annual surveys of manufacturing firms from 1998 to 2005 in China, first documents a positive correlation between industrial agglomeration and firm size, which is previously found in developed economies. Next, by using the instrumental variable estimations, we identify that industrial agglomeration has a positive and statistically significant causal impact on firm size. Finally, we find that firms are more likely to become larger by locating with a number of larger firms than with a larger number of firms.

Suggested Citation

  • Li, Dongya & Lu, Yi & Wu, Mingqin, 2012. "Industrial agglomeration and firm size: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 135-143.
    • Handle: RePEc:eee:regeco:v:42:y:2012:i:1:p:135-143
    DOI: 10.1016/j.regsciurbeco.2011.07.003
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    More about this item

    Keywords

    Industrial agglomeration; Firm size; Localization economies; Urbanization economies;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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