IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa11p696.html
   My bibliography  Save this paper

Deciphering the effects of agglomeration economies on firms' productive efficiency

Author

Listed:
  • Dimitris Skuras
  • Kostas Tsekouras
  • Efthalia Dimara

Abstract

The present work assess the effects of MAR and Jacob's type agglomeration economies on a sample of firms in the machineries and textiles industries in Greece for the periods 1989-91 and 1999-01. The analysis employs a stochastic production frontier function and allows agglomeration economies to enter as inputs and/or as factors reducing inefficiency. Results re-confirm that the effects of agglomeration economies are industry specific. In our study, the machineries industry benefits from MAR type agglomeration economies and the textiles industry benefits from Jacob's type agglomeration economies. Agglomeration economies may exercise a twin effect on firms' productive efficiency. First, as in the case of the machineries industry in our study, MAR agglomeration economies may act as a new input and affect the kernel of the production frontier. Second, agglomeration economies may act as a factor reducing technical inefficiency with non-neutral effects with labour and capital as in the case of both the machineries and the textiles industries in our study. Finally, it is indicated that agglomeration economies establish a type of "path dependence" for firms. Firms that make significant use of agglomeration economies survive to the next period at higher percentages in comparison to other firms in the same industry. At the same time, entrants are favoured by MAR type agglomeration economies while incumbents are favoured by Jacob's type agglomeration economies.

Suggested Citation

  • Dimitris Skuras & Kostas Tsekouras & Efthalia Dimara, 2011. "Deciphering the effects of agglomeration economies on firms' productive efficiency," ERSA conference papers ersa11p696, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa11p696
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa11/e110830aFinal00696.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    2. Moomaw, Ronald L., 1983. "Is population scale a worthless surrogate for business agglomeration economies?," Regional Science and Urban Economics, Elsevier, vol. 13(4), pages 525-545, November.
    3. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    4. Philippe Gagnepain & Marc Ivaldi, 2002. "Incentive Regulatory Policies: The Case of Public Transit Systems in France," RAND Journal of Economics, The RAND Corporation, vol. 33(4), pages 605-629, Winter.
    5. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2010. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," NBER Chapters, in: Agglomeration Economics, pages 15-66, National Bureau of Economic Research, Inc.
    6. A. Rodriguez-Pose & Riccardo Crescenzi, 2006. "R&D, spillovers, innovatoin systems and the genesis of regional growth in Europe," Departmental Working Papers of Economics - University 'Roma Tre' 0067, Department of Economics - University Roma Tre.
    7. Rosina Moreno & Raffaele Paci & Stefano Usai, 2005. "Spatial Spillovers and Innovation Activity in European Regions," Environment and Planning A, , vol. 37(10), pages 1793-1812, October.
    8. Daan P. Van Soest & Shelby Gerking & Frank G. Van Oort, 2006. "Spatial Impacts Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 46(5), pages 881-899, December.
    9. Ragnar Tveteras & George E. Battese, 2006. "Agglomeration Externalities, Productivity, And Technical Inefficiency," Journal of Regional Science, Wiley Blackwell, vol. 46(4), pages 605-625, October.
    10. repec:hal:spmain:info:hdl:2441/10145 is not listed on IDEAS
    11. Riccardo Crescenzi & Andrés Rodriguez-Pose & Michael Storper, 2007. "The territorial dynamics of innovation: a Europe-United States comparative analysis," Journal of Economic Geography, Oxford University Press, vol. 7(6), pages 673-709, November.
    12. Luc Anselin & Attila Varga & Zoltan Acs, 2008. "Local Geographic Spillovers Between University Research and High Technology Innovations," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 9, pages 95-121, Edward Elgar Publishing.
    13. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    14. George Battese & Sumiter Broca, 1997. "Functional Forms of Stochastic Frontier Production Functions and Models for Technical Inefficiency Effects: A Comparative Study for Wheat Farmers in Pakistan," Journal of Productivity Analysis, Springer, vol. 8(4), pages 395-414, November.
    15. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    16. Leo Sveikauskas, 1975. "The Productivity of Cities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 89(3), pages 393-413.
    17. Ivaldi, Marc & Monier-Dilhan, Sylvette & Simioni, Michel, 1995. "Stochastic production frontiers and panel data: A latent variable framework," European Journal of Operational Research, Elsevier, vol. 80(3), pages 534-547, February.
    18. Jung Won Sonn & Michael Storper, 2008. "The Increasing Importance of Geographical Proximity in Knowledge Production: An Analysis of US Patent Citations, 1975–1997," Environment and Planning A, , vol. 40(5), pages 1020-1039, May.
    19. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    20. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    21. Andres Rodriguez-Pose & Riccardo regstdcenzi, 2008. "Research and Development, Spillovers, Innovation Systems, and the Genesis of Regional Growth in Europe," Regional Studies, Taylor & Francis Journals, vol. 42(1), pages 51-67.
    22. Attila Varga, 2000. "Local Academic Knowledge Transfers and the Concentration of Economic Activity," Journal of Regional Science, Wiley Blackwell, vol. 40(2), pages 289-309, May.
    23. Henderson, J. Vernon, 1986. "Efficiency of resource usage and city size," Journal of Urban Economics, Elsevier, vol. 19(1), pages 47-70, January.
    24. repec:hal:wpspec:info:hdl:2441/10145 is not listed on IDEAS
    25. Moomaw, Ronald L., 1998. "Agglomeration economies: Are they exaggerated by industrial aggregation?," Regional Science and Urban Economics, Elsevier, vol. 28(2), pages 199-211, March.
    26. Mitra, Arup, 1999. "Agglomeration Economies as Manifested in Technical Efficiency at the Firm Level," Journal of Urban Economics, Elsevier, vol. 45(3), pages 490-500, May.
    27. Cornwell, Christopher & Schmidt, Peter & Sickles, Robin C., 1990. "Production frontiers with cross-sectional and time-series variation in efficiency levels," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 185-200.
    28. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    29. Cohen, Jeffrey P. & Paul, Catherine J. Morrison, 2005. "Agglomeration economies and industry location decisions: the impacts of spatial and industrial spillovers," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 215-237, May.
    30. Attila Varga, 1998. "Local academic knowledge spillovers and the concentration of economic activity," ERSA conference papers ersa98p493, European Regional Science Association.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Aimilia Protogerou & Yannis D. Caloghirou & Glykeria Karagouni, 2014. "The relevance of the 'dynamic capabilities' perspective in low-tech sectors," Chapters, in: Hartmut Hirsch-Kreinsen & Isabel Schwinge (ed.), Knowledge-Intensive Entrepreneurship in Low-Tech Industries, chapter 7, pages 138-165, Edward Elgar Publishing.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrés Rodríguez-Pose & Riccardo Crescenzi, 2008. "Mountains in a flat world: why proximity still matters for the location of economic activity," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 1(3), pages 371-388.
    2. Koh, Hyun-Ju & Riedel, Nadine & Böhm, Tobias, 2013. "Do governments tax agglomeration rents?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 92-106.
    3. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    4. Feldman, Maryann P. & Kogler, Dieter F., 2010. "Stylized Facts in the Geography of Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 381-410, Elsevier.
    5. Elsie L. Echeverri-Carroll & Sofia G. Ayala, 2011. "Urban Wages: Does City Size Matter?," Urban Studies, Urban Studies Journal Limited, vol. 48(2), pages 253-271, February.
    6. Ryohei Nakamura, 2005. "Agglomeration Economies and Linkage Externalities in Urban Manufacturing Industries - A Case of Japanese Cities," ERSA conference papers ersa05p768, European Regional Science Association.
    7. Roberto Camagni & Roberta Capello & Andrea Caragliu, 2013. "One or infinite optimal city sizes? In search of an equilibrium size for cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 309-341, October.
    8. Mohamed Amara, 2019. "Firm Performance and Agglomeration Effects: Evidence from Tunisian Firm-level Data," Working Papers 1297, Economic Research Forum, revised 2019.
    9. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2013. "Productivity Growth In The Old And New Europe: The Role Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 418-442, August.
    10. Andrés Rodríguez-Pose & Fabrice Comptour, 2010. "Do clusters generate greater innovation and growth? An analysis of European regions," Working Papers 2010-15, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
    11. Andrés Rodríguez-Pose & Edna M. Villarreal Peralta, 2015. "Innovation and Regional Growth in Mexico: 2000–2010," Growth and Change, Wiley Blackwell, vol. 46(2), pages 172-195, June.
    12. Riccardo Crescenzi & Andrés Rodríguez-Pose, 2012. "An ‘Integrated’ Framework For The Comparative Analysis Of The Territorial Innovation Dynamics Of Developed And Emerging Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 26(3), pages 517-533, July.
    13. Renjith Ramachandran & Ketan Reddy & Subash Sasidharan, 2020. "Agglomeration and Productivity: Evidence from Indian Manufactuaring," Studies in Microeconomics, , vol. 8(1), pages 75-94, June.
    14. Faberman, R. Jason & Freedman, Matthew, 2016. "The urban density premium across establishments," Journal of Urban Economics, Elsevier, vol. 93(C), pages 71-84.
    15. Miguel Ángel García & Ivan Muñiz, 2005. "El impacto espacial de las economías de aglomeración y su efecto sobre la estructura urbana.El caso de la industria en Barcelona, 1986-1996," Working Papers wpdea0509, Department of Applied Economics at Universitat Autonoma of Barcelona.
    16. Akihiro Otsuka & Mika Goto, 2015. "Agglomeration economies in Japanese industries: the Solow residual approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(2), pages 401-416, March.
    17. Roberto Camagni & Roberta Capello & Andrea Caragliu, 2013. "Una o infinite dimensioni urbane ottime? Alla ricerca di una dimensione di equilibrio," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2013(3), pages 53-88.
    18. Andrés Rodríguez‐Pose & Callum Wilkie, 2019. "Innovating in less developed regions: What drives patenting in the lagging regions of Europe and North America," Growth and Change, Wiley Blackwell, vol. 50(1), pages 4-37, March.
    19. Riccardo Crescenzi & Andrés Rodríguez-Pose, 2013. "R&D, Socio-Economic Conditions, and Regional Innovation in the U.S," Growth and Change, Wiley Blackwell, vol. 44(2), pages 287-320, June.
    20. Díaz Serrano, Lluís, 2015. "What explains productivity differentials across spanish cities?," Working Papers 2072/247805, Universitat Rovira i Virgili, Department of Economics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p696. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.