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Regional Industrial Dominance, Agglomeration Economies, and Manufacturing Plant Productivity

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  • Joshua Drucker
  • Edward Feser

Abstract

In a seminal article, Benjamin Chinitz (1961) focused attention on the effects that industry size, structure, and economic diversification have on firm performance and regional economies. He also raised a related but conceptually distinct question that has been overlooked since: how does the extent to which a regional industry is concentrated in a single or small number of firms impact the performance of other local firms within that industry? He suggested that such regional industrial dominance may impact input prices, limit capital accessibility, deter entrepreneurial activity, and reduce the regional availability of agglomeration economies such as specialized labor and supply pools In this paper, we use an establishment-level production function to quantify the links between industrial dominance, agglomeration economies, and firm performance. We consider two questions. First, do greater levels of regional industrial dominance lead to lower economic performance by small, dominated manufacturing plants? Second, are small plants in dominated regional industries more limited in capturing regional agglomeration benefits and therefore do they face rigidities in deploying production factors to maximum advantage? Our results suggest that regional industrial organization does influence productivity but that the effect tends to be a direct one, rather than an indirect effect via its influence on agglomeration economies.

Suggested Citation

  • Joshua Drucker & Edward Feser, 2007. "Regional Industrial Dominance, Agglomeration Economies, and Manufacturing Plant Productivity," Working Papers 07-31, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:07-31
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    File URL: https://www2.census.gov/ces/wp/2007/CES-WP-07-31.pdf
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    Cited by:

    1. Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 623-663, September.
    2. Edward L. Glaeser & William R. Kerr & Giacomo A. M. Ponzetto, 2010. "Clusters of Entrepreneurship," NBER Chapters, in: Cities and Entrepreneurship, National Bureau of Economic Research, Inc.
    3. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2012. "What explains big gender disparities in India ? local industrial structures and female entrepreneurship," Policy Research Working Paper Series 6228, The World Bank.
    4. Ejaz Ghani & William R. Kerr & Stephen O'Connell, 2014. "Spatial Determinants of Entrepreneurship in India," Regional Studies, Taylor & Francis Journals, vol. 48(6), pages 1071-1089, June.
    5. Drucker, Joshua & Feser, Edward, 2012. "Regional industrial structure and agglomeration economies: An analysis of productivity in three manufacturing industries," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 1-14.
    6. 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).
    7. Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2013. "Local industrial structures and female entrepreneurship in India," Journal of Economic Geography, Oxford University Press, vol. 13(6), pages 929-964, November.
    8. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2012. "What makes cities more competitive ? spatial determinants of entrepreneurship in India," Policy Research Working Paper Series 6198, The World Bank.
    9. Martijn J. Smit, 2017. "Cross-border agglomeration benefits," Letters in Spatial and Resource Sciences, Springer, vol. 10(3), pages 375-383, October.
    10. Joshua Drucker, 2009. "Trends in Regional Industrial Concentration in the United States," Working Papers 09-06, Center for Economic Studies, U.S. Census Bureau.

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