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The mechanisms of agglomeration: Evidence from the effect of inter-industry relations on the location of new firms

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  • Jofre-Monseny, Jordi
  • Marín-López, Raquel
  • Viladecans-Marsal, Elisabet

Abstract

The objective of this paper is to explore the relative importance of each of Marshall’s agglomeration mechanisms by examining the location of new manufacturing firms in Spain. In particular, we estimate the count of new firms by industry and location as a function of (pre-determined) local employment levels in industries that: (1) use similar workers (labor market pooling); (2) have a customer–supplier relationship (input sharing); and (3) use similar technologies (knowledge spillovers). We examine the variation in the creation of new firms across cities and across municipalities within large cities to shed light on the geographical scope of each of the three agglomeration mechanisms. We find evidence of all three agglomeration mechanisms, although their incidence differs depending on the geographical scale of the analysis.

Suggested Citation

  • Jofre-Monseny, Jordi & Marín-López, Raquel & Viladecans-Marsal, Elisabet, 2011. "The mechanisms of agglomeration: Evidence from the effect of inter-industry relations on the location of new firms," Journal of Urban Economics, Elsevier, vol. 70(2), pages 61-74.
    • Handle: RePEc:eee:juecon:v:70:y:2011:i:2:p:61-74
    DOI: 10.1016/j.jue.2011.05.002
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    More about this item

    Keywords

    Agglomeration economies; Co-agglomeration; Labor market pooling; Input sharing; Knowledge spillovers;
    All these keywords.

    JEL classification:

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

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