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Agglomeration Economies and Industry Location Decisions: The Impacts of Vertical and Horizontal Spillovers

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  • Cohen, Jeffrey P.
  • Morrison Paul, Catherine J.

Abstract

Economic analysis of production processes and performance typically neglects consideration of spatial and industry inter-dependencies that may affect economic performance, although there is increasing theoretical recognition that such linkages may be both substantive and expanding. In particular, thick market or agglomeration effects may arise due to knowledge or other types of spillovers associated with own-industry (horizontal), and supply-side or demand-driven (vertical), externalities. In this paper we provide a conceptual and empirical framework for measuring and evaluating such spillovers, which allows us both to quantify their cost-effects, and to evaluate their contribution to location decisions. We focus on the U.S. food manufacturing sector, and the spillovers that may occur across states within the sector and from agricultural production (supply) and consumer buying power (demand). And we find substantive total and marginal cost-impacts in both spatial and industry dimensions, which appear to be motivating forces for regional concentration patterns of the U.S. food manufacturing industries.

Suggested Citation

  • Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Agglomeration Economies and Industry Location Decisions: The Impacts of Vertical and Horizontal Spillovers," Working Papers 190899, University of California, Davis, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucdavw:190899
    DOI: 10.22004/ag.econ.190899
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    References listed on IDEAS

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    9. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Spatial And Supply/Demand Agglomeration Economies: An Evaluation Of State-And-Industry-Linkages In The U.S. Food System," Working Papers 11982, University of California, Davis, Department of Agricultural and Resource Economics.
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    Cited by:

    1. Ivan Boal-San Miguel & Luis Cesar Herrero-Prieto, 2016. "Where Are the Artists? Analyzing Economies of Agglomeration in Spain," ACEI Working Paper Series AWP-11-2016, Association for Cultural Economics International, revised Oct 2016.
    2. An, Donghwan & Kim, Kwansoo & Kwon, Oh Sang, 2004. "The Demand- and Supply-Side Spillovers in the Food Manufacturing Industry in Korea: An Empirical Evidence from Both Local Level and Individual Firm Level," 2004 Annual meeting, August 1-4, Denver, CO 20238, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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