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Geographic concentration and establishment scale: can panel data tell us more ?

  • BARRIOS, Salvador
  • BERTINELLI, Luisito
  • STROBL, Eric

In a recent study, Holmes and Stevens (2002) identify for the first time a positive relationship that exists between establishment scale and local industry concentration using a large cross-sectional plant level data set for the US. Using an exhaustive plant level panel data set for Irish manufacturing covering nearly three decades, we are able to extend their analysis in two ways. Firstly, we show that failing to control for fixed effects biases the relationship upward, although the essence of it still remains. Secondly, the link is substantially weaker when plants locate for the first time in anarea, but strengthens with age for those that survive in the long run. We link our results to recent contributions on the dynamics of geographic concentration.

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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2003036.

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Date of creation: 00 May 2003
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Handle: RePEc:cor:louvco:2003036
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  1. Gilles Duranton & Henry G. Overman, 2005. "Testing for localization using micro-geographic data," LSE Research Online Documents on Economics 581, London School of Economics and Political Science, LSE Library.
  2. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc.
  3. Henderson I. Vernon, 1994. "Where Does an Industry Locate?," Journal of Urban Economics, Elsevier, vol. 35(1), pages 83-104, January.
  4. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
  6. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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