Estimation of semiparametric sorting models: Explaining geographical concentration of business services

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

We introduce a sorting model for firms where firm-specific profit coefficients can be identified given information on location choices of firms. It is shown that one may estimate such a model using a semiparametric Poisson approach. We apply this approach by examining the effects of specialization and diversity at the local level on profitability of business services firms. We find that, for most firms, profitability increases with specialization and decreases with diversity. In line with the literature, it is shown that specialization is particularly profitable for large and older firms, whereas diversity is relatively more profitable for smaller and younger firms. © 2013 Elsevier B.V.
Original languageEnglish
Pages (from-to)14-28
JournalRegional Science and Urban Economics
Volume44
Issue numberJanuary
DOIs
Publication statusPublished - 2014

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title = "Estimation of semiparametric sorting models: Explaining geographical concentration of business services",
abstract = "We introduce a sorting model for firms where firm-specific profit coefficients can be identified given information on location choices of firms. It is shown that one may estimate such a model using a semiparametric Poisson approach. We apply this approach by examining the effects of specialization and diversity at the local level on profitability of business services firms. We find that, for most firms, profitability increases with specialization and decreases with diversity. In line with the literature, it is shown that specialization is particularly profitable for large and older firms, whereas diversity is relatively more profitable for smaller and younger firms. {\circledC} 2013 Elsevier B.V.",
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journal = "Regional Science and Urban Economics",
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Estimation of semiparametric sorting models: Explaining geographical concentration of business services. / Koster, H.R.A.; van Ommeren, J.N.; Rietveld, P.

In: Regional Science and Urban Economics, Vol. 44, No. January, 2014, p. 14-28.

Research output: Contribution to JournalArticleAcademicpeer-review

TY - JOUR

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AU - Koster, H.R.A.

AU - van Ommeren, J.N.

AU - Rietveld, P.

PY - 2014

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N2 - We introduce a sorting model for firms where firm-specific profit coefficients can be identified given information on location choices of firms. It is shown that one may estimate such a model using a semiparametric Poisson approach. We apply this approach by examining the effects of specialization and diversity at the local level on profitability of business services firms. We find that, for most firms, profitability increases with specialization and decreases with diversity. In line with the literature, it is shown that specialization is particularly profitable for large and older firms, whereas diversity is relatively more profitable for smaller and younger firms. © 2013 Elsevier B.V.

AB - We introduce a sorting model for firms where firm-specific profit coefficients can be identified given information on location choices of firms. It is shown that one may estimate such a model using a semiparametric Poisson approach. We apply this approach by examining the effects of specialization and diversity at the local level on profitability of business services firms. We find that, for most firms, profitability increases with specialization and decreases with diversity. In line with the literature, it is shown that specialization is particularly profitable for large and older firms, whereas diversity is relatively more profitable for smaller and younger firms. © 2013 Elsevier B.V.

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DO - 10.1016/j.regsciurbeco.2013.10.001

M3 - Article

VL - 44

SP - 14

EP - 28

JO - Regional Science and Urban Economics

JF - Regional Science and Urban Economics

SN - 0166-0462

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