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The Effect of Local Demand on Industry Location

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  • Justman, Moshe

Abstract

This paper compares the geographic dispersion of employment in manufacturing industries across U.S. metropolitan areas with an imputed measure of local industry demand. The results indicate that local demand has significant long-term and short-term location effects in many industries, including some with negligible transportation costs. Variation in location patterns across industries indicates that demand-side agglomeration economies and technological intensity strengthen the pull of local demand, while supply-side economies of scale and agglomeration effects weaken it. Implications are discussed with regard to international trade, technological change, industrialization and development, urban and regional issues, and industrial organization. Copyright 1994 by MIT Press.

Suggested Citation

  • Justman, Moshe, 1994. "The Effect of Local Demand on Industry Location," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 742-753, November.
  • Handle: RePEc:tpr:restat:v:76:y:1994:i:4:p:742-53
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    Cited by:

    1. Donald R. Davis & David E. Weinstein, 2001. "Market Size, Linkages, and Productivity: A Study of Japanese Regions," NBER Working Papers 8518, National Bureau of Economic Research, Inc.
    2. Davis, Donald R. & Weinstein, David E., 1999. "Economic geography and regional production structure: An empirical investigation," European Economic Review, Elsevier, vol. 43(2), pages 379-407, February.
    3. Walz, Uwe, 1998. "Does an enlargement of a common market stimulate growth and convergence?," Journal of International Economics, Elsevier, vol. 45(2), pages 297-321, August.
    4. Markusen, James R., 2013. "Putting per-capita income back into trade theory," Journal of International Economics, Elsevier, vol. 90(2), pages 255-265.
    5. Gordon H. Hanson, 2000. "Scale Economies and the Geographic Concentration of Industry," NBER Working Papers 8013, National Bureau of Economic Research, Inc.
    6. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    7. Head, Keith & Mayer, Thierry, 2004. "The empirics of agglomeration and trade," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 59, pages 2609-2669 Elsevier.
    8. Theodore M. Crone, 1997. "Where have all the factory jobs gone - and why?," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 3-18.
    9. repec:spo:wpecon:info:hdl:2441/10191 is not listed on IDEAS
    10. Anke Kutschke & Alexandra Rese & Daniel Baier, 2016. "The Effects of Locational Factors on the Performance of Innovation Networks in the German Energy Sector," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-18, December.
    11. Nica, M., 2010. "Small Business Clusters in Oklahoma: MAR or Jacobs Effects?," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 10(2).
    12. Brian P. Macfie, 2008. "The Impact Of Utility Deregulation In Arizona," Contemporary Economic Policy, Western Economic Association International, vol. 26(2), pages 335-350, April.

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