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A Spatial Approach to Identifying Agglomeration Determinants


  • MORI Tomoya
  • Tony E. SMITH


Typical analyses of industrial agglomerations start with some aggregate measure of the "agglomeration degree" for each industry, and attempt to explain differences in these values across industries by regressing them on sets of industrial attributes. But this aggregation makes it difficult to capture the spatial aspects of individual agglomerations. In the present paper, we develop a more explicit spatial approach to identifying agglomeration determinants by means of a two-stage analysis. First, we detect individual spatial clusters of each industry on a map. We then attempt to explain differences in these cluster patterns between industries by employing an appropriate regression framework. Here, cluster employment sizes are regressed on selected regional attributes for each industry-cluster pair, and significant differences between industries are captured in terms of industry-level interactions with these attributes. This modeling approach is then applied to the three-digit manufacturing industries in Japan.

Suggested Citation

  • MORI Tomoya & Tony E. SMITH, 2013. "A Spatial Approach to Identifying Agglomeration Determinants," Discussion papers 13014, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:13014

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    References listed on IDEAS

    1. Pierre‐Philippe Combes & Gilles Duranton & Laurent Gobillon & Diego Puga & Sébastien Roux, 2012. "The Productivity Advantages of Large Cities: Distinguishing Agglomeration From Firm Selection," Econometrica, Econometric Society, vol. 80(6), pages 2543-2594, November.
    2. 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.
    3. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
    4. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    5. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2005. "A Divergence Statistic for Industrial Localization," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 635-651, November.
    6. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    7. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-1297, November.
    8. Melo, Patricia C. & Graham, Daniel J. & Noland, Robert B., 2009. "A meta-analysis of estimates of urban agglomeration economies," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 332-342, May.
    9. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
    10. Eric Marcon & Florence Puech, 2010. "Measures of the geographic concentration of industries: improving distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 745-762, September.
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