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Implications of Agglomeration Economics and Market Access for Firm Growth in Food Manufacturing

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  • Schmit, Todd M.
  • Hall, Jeffrey S.

Abstract

With the persistant changes in technology and increased competition in food manufacturing, it is important to reassess the effects of agglomeration economies and market access on the performance of firms in the industry. Using survey data from a recent survey of New York state food processors, an ordered logit analysis reveals that firm growth is related to important upstream and downstream market conditions as reflected in increased access to agricultural inputs and growing population canters. The clustering of similar manufacturers has negative effects on firm growth in rural areas, but these effects are not significant in urban areas. For these reasons, policies that promote intra-industry or cross-industry collaboration would likely benefit food manufacturers, but these benefits would be limited to firms in close geographic proximity to one another. Moreover, in rural areas especially, manufacturing firms and community planners need to be aware of possible negative effects of competition from growing concentrations of firms so that these issues can be addressed before local business growth is adversely affected.

Suggested Citation

  • Schmit, Todd M. & Hall, Jeffrey S., 2011. "Implications of Agglomeration Economics and Market Access for Firm Growth in Food Manufacturing," Working Papers 126541, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:126541
    DOI: 10.22004/ag.econ.126541
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    Cited by:

    1. Marasteanu, I. Julia & Jaenicke, Edward C., 2013. "Agglomeration and Spatial Dependence in Certified Organic Operations in the United States," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149551, Agricultural and Applied Economics Association.
    2. Wu, Wenchao, 2017. "Agglomeration Economy and Input-output Linkage: Evidence from the Entry of the Agro-food Industry in China," Japanese Journal of Agricultural Economics (formerly Japanese Journal of Rural Economics), Agricultural Economics Society of Japan (AESJ), vol. 19.
    3. Marasteanu, I. Julia & Jaenicke, Edward C., 2014. "Clusters of Organic Operations and their Impact on Regional Economic Growth in the United States," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170336, Agricultural and Applied Economics Association.
    4. Höhler, Julia & Kühl, Rainer, 2016. "Do Growth Rates Depend on the Initial Firm Size? Evidence for the German Agribusiness," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 65(04), December.
    5. Dadan Wardhana & Rico Ihle & Wim Heijman, 2020. "Farmer cooperation in agro‐clusters: Evidence from Indonesia," Agribusiness, John Wiley & Sons, Ltd., vol. 36(4), pages 725-750, October.
    6. Jeffrey K. O'Hara & Jeffrey Lin, 2020. "Population Density and Local Food Market Channels," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(3), pages 477-496, September.
    7. Höhler, Julia & Kuhl, Rainer, 2014. "Corporations in an evolving competitive environment - evidence for the German agribusiness," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182689, European Association of Agricultural Economists.
    8. Sarah A. Low & Martha Bass & Dawn Thilmany & Marcelo Castillo, 2021. "Local Foods Go Downstream: Exploring the Spatial Factors Driving U.S. Food Manufacturing," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 896-915, September.
    9. Colombo, Sergio & Sánchez-Martínez, José Domingo & Perujo-Villanueva, Manuel, 2020. "The trade-offs between economic efficiency and job creation in olive grove smallholdings," Land Use Policy, Elsevier, vol. 96(C).
    10. Hammed Amusa & Njeri Wabiri & David Fadiran, 2019. "Agglomeration and productivity in South Africa: Evidence from firm-level data," WIDER Working Paper Series wp-2019-93, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Agricultural and Food Policy; Production Economics;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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