Agglomeration Economies and Productivity: A Structural Estimation Approach Using Commercial Rents

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

We gain more insight into the heterogeneity in firms' productivity regarding agglomeration economies. Given a production function that allows for input factor substitution, we identify ratios of firm-specific production parameters employing a hedonic price approach. We use unique microdata of commercial rents and firm characteristics, and employ semiparametric estimation techniques. The results show that agglomeration economies capitalize in commercial rents. Nevertheless, expenditure on agglomeration is in general limited: for example, it is on average only 5.3% of expenditure on office floor space. It is much higher in some sectors: for retail firms, it is about 20% of the expenditure on floor space. © 2013 The London School of Economics and Political Science.
Original languageEnglish
Pages (from-to)63-85
JournalEconomica
Volume81
Issue number321
DOIs
Publication statusPublished - 2014

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Expenditure
Agglomeration economies
Rent
Productivity
Structural estimation
Agglomeration
Political Science
Retail
Production function
Hedonic prices
Factor substitution
Firm characteristics
Semiparametric estimation
Economics
Micro data
Firm productivity

Cite this

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title = "Agglomeration Economies and Productivity: A Structural Estimation Approach Using Commercial Rents",
abstract = "We gain more insight into the heterogeneity in firms' productivity regarding agglomeration economies. Given a production function that allows for input factor substitution, we identify ratios of firm-specific production parameters employing a hedonic price approach. We use unique microdata of commercial rents and firm characteristics, and employ semiparametric estimation techniques. The results show that agglomeration economies capitalize in commercial rents. Nevertheless, expenditure on agglomeration is in general limited: for example, it is on average only 5.3{\%} of expenditure on office floor space. It is much higher in some sectors: for retail firms, it is about 20{\%} of the expenditure on floor space. {\circledC} 2013 The London School of Economics and Political Science.",
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Agglomeration Economies and Productivity: A Structural Estimation Approach Using Commercial Rents. / Koster, H.R.A.; van Ommeren, J.N.; Rietveld, P.

In: Economica, Vol. 81, No. 321, 2014, p. 63-85.

Research output: Contribution to JournalArticleAcademicpeer-review

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AB - We gain more insight into the heterogeneity in firms' productivity regarding agglomeration economies. Given a production function that allows for input factor substitution, we identify ratios of firm-specific production parameters employing a hedonic price approach. We use unique microdata of commercial rents and firm characteristics, and employ semiparametric estimation techniques. The results show that agglomeration economies capitalize in commercial rents. Nevertheless, expenditure on agglomeration is in general limited: for example, it is on average only 5.3% of expenditure on office floor space. It is much higher in some sectors: for retail firms, it is about 20% of the expenditure on floor space. © 2013 The London School of Economics and Political Science.

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