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Entrepreneurship and spatial externalities: Theory and measurement


  • Roberta Capello

    () (Departement of Management, Economics and Industrial Engineering, Politecnico di Milano, Piazza Leonardo da Vinci 32, 20133 Milano, Italy)


The paper presents an empirical analysis on the role played by urbanisation and localisation economies on factor productivity of firms. A vast literature exists on this issue, conceptually presenting reasons supporting either industry size or city size as sources of external advantages. In general, the empirical analyses are based on the estimates of aggregate city or industry production functions; the limited hypotheses characterising these studies have suggested to test another methodology, based on the estimate of a production function at the firm level, and calculate how factor productivity changes according to different degrees of urbanisation and localisation economies. The methodology is applied to firms chosen in the high-tech sector, which demonstrates a high spatial concentration in particular areas of the Metropolitan Area of Milan. The result is that factor productivity is influenced by both urbanisation and localisation economies, but the latter show an increasing positive effect on factor productivity. Moreover, the size of firms plays an important role in defining the impact of urbanisation and localisation economies on firms' outcome.

Suggested Citation

  • Roberta Capello, 2002. "Entrepreneurship and spatial externalities: Theory and measurement," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(3), pages 387-402.
  • Handle: RePEc:spr:anresc:v:36:y:2002:i:3:p:387-402

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    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns


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