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Agglomeration Matters for Trade

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  • Enrique Moral-Benito

    (Bank of Spain)

Abstract

We use a unique administrative dataset of Spanish exporters to document the existence of exporters' geographical agglomeration by export-destination. We reveal that firms selling to countries with worse business regulations, dissimilar language and different currency tend to cluster signicantly more. We then assess the implications of exporters' geographical agglomeration for firms' behaviour and for the estimated welfare gains from trade. On the one hand, we find that exporters engage in more stable trade relationships with those countries that are the export-destinations of nearby firms. On the other, we introduce agglomeration in a model of international trade a la Melitz (2003). Using our Spanish firm-level data, we find that relative to a model without agglomeration, accounting for this phenomenon increases by 44% the elasticity of welfare with respect to fixed trade-costs.

Suggested Citation

  • Enrique Moral-Benito, 2013. "Agglomeration Matters for Trade," 2013 Meeting Papers 85, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:85
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    References listed on IDEAS

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    Cited by:

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    3. Bisztray, Márta & Koren, Miklós & Szeidl, Adam, 2018. "Learning to import from your peers," Journal of International Economics, Elsevier, vol. 115(C), pages 242-258.
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    5. Andrew J. Cassey & Katherine N. Schmeiser & Andreas Waldkirch, 2016. "Exporting Spatial Externalities," Open Economies Review, Springer, vol. 27(4), pages 697-720, September.

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    More about this item

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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