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Determinants of Firm Location: Empirical Evidence for France

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Abstract

This paper analyzes the effects of local externalities on the probability of starting a new economic activity. We use firm-level data and geographic information on French zip-codes for 1993-2002. Poisson and Negative Binomial panel data models are estimated as they naturally allow for large sets of location choices with frequent zero outcomes and control for unobserved zip-code heterogeneity. To measure the geographic extent of location externalities we compute localization, urbanization and congestion variables for neighboring regions. We separately analyze the scale effects stemming from exporting and non-exporting firms. Our results show that agglomeration economies at zip-code level strongly effect the location decision of industrial establishments and find the presence of agglomeration shadows, one of the core predictions of the standard New Economic Geography formulations.

Suggested Citation

  • Nadia Rocha, 2008. "Determinants of Firm Location: Empirical Evidence for France," IHEID Working Papers 08-2008, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heidwp08-2008
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    References listed on IDEAS

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    1. Josep Maria Arauzo Carod & Miguel C. ManjÛn AntolÌn, 2004. "Firm Size and Geographical Aggregation: An Empirical Appraisal in Industrial Location," Small Business Economics, Springer, vol. 22(3_4), pages 299-312, April.
    2. Josep Maria Arauzo Carod, 2005. "Determinants of industrial location: An application for Catalan municipalities," Papers in Regional Science, Wiley Blackwell, vol. 84(1), pages 105-120, March.
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    Keywords

    Firm Location; Agglomeration Economies; Agglomeration Shadows;

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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