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Plants in Space

Author

Listed:
  • Ezra Oberfield

    (Princeton University)

  • Esteban Rossi-Hansberg

    (Princeton University)

  • Nicholas Trachter

    (Federal Reserve Bank of Richmond)

  • Pierre-Daniel Sarte

    (Federal Reserve Bank of Richmond)

Abstract

This paper studies how the sorting of firms across space can amplify ex-ante differences in local conditions and how differences in economic activity across space can increase variation in firm-level outcomes. We construct a model in which heterogeneous firms produce in multiple locations to minimize the cost of transporting their goods to customers, limited by firms' spans of control and plants' cannibalization of each other's demand. The rent schedule induces higher productivity firms to place their plants in locations that tend to have higher effective demand. We document that even among plants in the same firms, size and placement vary systematically with local economic conditions. Further, we document that larger firms (as measured by national employment) tend to place their plants in more dense locations.

Suggested Citation

  • Ezra Oberfield & Esteban Rossi-Hansberg & Nicholas Trachter & Pierre-Daniel Sarte, 2019. "Plants in Space," 2019 Meeting Papers 1507, Society for Economic Dynamics.
    • Handle: RePEc:red:sed019:1507
    as

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    Other versions of this item:

    • Ezra Oberfield & Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Nicholas Trachter, 2020. "Plants in Space," NBER Working Papers 27303, National Bureau of Economic Research, Inc.
    • Rossi-Hansberg, Esteban & Oberfield, Ezra & Sarte, Pierre-Daniel & Trachter, Nicholas, 2020. "Plants in Space," CEPR Discussion Papers 14823, C.E.P.R. Discussion Papers.
    • Ezra Oberfield & Esteban Rossi-Hansberg & Pierre-Daniel G. Sarte & Nicholas Trachter, 2020. "Plants in Space," Working Paper 20-05, Federal Reserve Bank of Richmond.

    Citations

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    Cited by:

    1. is not listed on IDEAS
    2. Chang-Tai Hsieh & Esteban Rossi-Hansberg, 2023. "The Industrial Revolution in Services," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(1), pages 3-42.
    3. Pauly, Stefan & Stipanicic, Fernando, 2021. "The creation and diffusion of knowledge: Evidence from the Jet Age," CEPREMAP Working Papers (Docweb) 2112, CEPREMAP.
    4. Yuhei Miyauchi & Kentaro Nakajima & Stephen J Redding, 2025. "The Economics of Spatial Mobility: Theory and Evidence Using Smartphone Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 140(4), pages 2507-2570.
    5. Gianandrea Lanzara & Matteo Santacesaria, 2021. "Market Areas in General Equilibrium," Papers 2110.15849, arXiv.org, revised Feb 2023.
    6. Acosta, Camilo & Lyngemark, Ditte Håkonsson, 2021. "The internal spatial organization of firms: Evidence from Denmark," Journal of Urban Economics, Elsevier, vol. 124(C).
    7. Cameron LAPOINT & Shogo SAKABE, 2021. "Place-Based Policies and the Geography of Corporate Investment," Discussion papers 21059, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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