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Firm Formation And Industrial Agglomeration Under Monopolistic Competition - A Study On German Regions

Author

Listed:
  • Stephan Brunow

    (University of Applied Labour Studies, UK)

  • Peter Nijkamp

    (JADS,‘s-Hertogenbosch, The Netherlands and Alexandru Ioan Cuza University, Iasi, Romania)

Abstract

The presence of agglomeration economies tends to prompt a relocation and concentration of industries. It is also plausible that firm start-up activities reveal such effects. The present paper introduces an empirical testable model inspired by the New Economic Geography and human capital externalities literature. The novelty of this paper is that it derives a measure of agglomeration economies inspired by a microeconomic analysis, based on households’ and firms’ maximization behavior and reflected in the real market potential. Besides agglomeration forces, dispersion and human capital effects are separated and explicitly controlled for. This conceptual framework is empirically tested for German regions and industries. The paper sheds new light on the general mechanisms of intra-industrial agglomeration forces, as it explicitly considers the spatial distribution of economic activities. Our study provides clear evidence for the empirical significance and validy of the New Economic Geography.

Suggested Citation

  • Stephan Brunow & Peter Nijkamp, 2019. "Firm Formation And Industrial Agglomeration Under Monopolistic Competition - A Study On German Regions," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 13(2), pages 1-25, DECEMBER.
    • Handle: RePEc:rrs:journl:v:13:y:2019:i:2:p:1-25
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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