Spatial Production Economics

This chapter summarizes the empirical literature that uses a spatial analysis framework in production economics. This literature takes advantage of the spatial dimension of the data to capture the spillover effects of neighboring production units. In the first three sections, we outline standard spatial extensions of the neoclassical production models aiming to measure knowledge spillovers, the effect of network inputs and economies of agglomeration. The next three sections outline the literature that on one hand examines returns to scale and productivity growth from both internal and external inputs, and on the other hand summarize the spatial econometric techniques used in frontier analyses of firms’ production. The last section includes a set of final remarks regarding the application of spatial econometric techniques in production analyses.