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Agglomeration within and between regions: Two econometric based indicators


  • Valter Di Giacinto

    () (Bank of Italy, L�Aquila Branch, Economic Research Unit)

  • Marcello Pagnini

    () (Bank of Italy, Bologna Branch, Economic Research Unit)


We propose two indexes to measure the agglomeration forces acting within and between different regions. Unlike the existing measures of agglomeration, our model-based indexes allow for simultaneous treatment of both aspects. Local plant diffusion in a given industry is modelled as a spatial error components process (SEC). Maximum likelihood inference on model parameters is dealt with, including the problem of data censoring. The statistical properties of standard agglomeration indexes in the data environment provided by our SEC model are then treated. Finally, our methodology is applied to Italian census data for both manufacturing and service industries.

Suggested Citation

  • Valter Di Giacinto & Marcello Pagnini, 2008. "Agglomeration within and between regions: Two econometric based indicators," Temi di discussione (Economic working papers) 674, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_674_08

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    References listed on IDEAS

    1. Marcello Pagnini, 2002. "Misura e determinanti dell�agglomerazione spaziale nei comparti industriali in Italia," Temi di discussione (Economic working papers) 452, Bank of Italy, Economic Research and International Relations Area.
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    6. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
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    13. Paulo Guimarães & Octávio Figueiredo & Douglas Woodward, 2004. "Measuring the Localization of Economic Activity: A Random Utility Approach," FEP Working Papers 161, Universidade do Porto, Faculdade de Economia do Porto.
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    Cited by:

    1. Di Giacinto, Valter & Pagnini, Marcello, 2011. "Local and global agglomeration patterns: Two econometrics-based indicators," Regional Science and Urban Economics, Elsevier, vol. 41(3), pages 266-280, May.

    More about this item


    agglomeration; spatial autocorrelation; spatial error components model;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • L70 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - General
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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