Papers written by Author(s): 'Edward Feser'
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Viewing papers 1 through 4 of 4
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Working PaperRegional Industrial Dominance, Agglomeration Economies, and Manufacturing Plant Productivity
December 2007
Working Paper Number:
CES-07-31
In a seminal article, Benjamin Chinitz (1961) focused attention on the effects that industry size, structure, and economic diversification have on firm performance and regional economies. He also raised a related but conceptually distinct question that has been overlooked since: how does the extent to which a regional industry is concentrated in a single or small number of firms impact the performance of other local firms within that industry? He suggested that such regional industrial dominance may impact input prices, limit capital accessibility, deter entrepreneurial activity, and reduce the regional availability of agglomeration economies such as specialized labor and supply pools In this paper, we use an establishment-level production function to quantify the links between industrial dominance, agglomeration economies, and firm performance. We consider two questions. First, do greater levels of regional industrial dominance lead to lower economic performance by small, dominated manufacturing plants? Second, are small plants in dominated regional industries more limited in capturing regional agglomeration benefits and therefore do they face rigidities in deploying production factors to maximum advantage? Our results suggest that regional industrial organization does influence productivity but that the effect tends to be a direct one, rather than an indirect effect via its influence on agglomeration economies.View Full Paper PDF
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Working PaperAgglomeration, Enterprise Size, and Productivity
August 2004
Working Paper Number:
CES-04-15
Much research on agglomeration economies, and particularly recent work that builds on Marshall's concept of the industrial district, postulates that benefits derived from proximity between businesses are strongest for small enterprises (Humphrey 1995, Sweeney and Feser 1998). With internal economies a function of the shape of the average cost curve and level of production, and external economies in shifts of that curve, a small firm enjoying external economies characteristic of industrial districts (or complexes or simply urbanized areas) may face the same average costs as the larger firm producing a higher volume of output (Oughton and Whittam 1997; Carlsson 1996; Humphrey 1995). Thus we observe the seeming paradox of large firms that enjoy internal economies of scale co-existing with smaller enterprises that should, by all accounts, be operating below minimum efficient scale. With the Birch-inspired debate on the relative job- and innovation-generating capacity of small and large firms abating (Ettlinger 1997), research on the small firm sector has shifted to an examination of the business strategies and sources of competitiveness of small enterprises (e.g., Pratten 1991, Nooteboom 1993). Technological external scale economies are a key feature of this research (Oughton and Whittam 1997).View Full Paper PDF
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Working PaperA Flexible Test for Agglomeration Economies in Two U.S. Manufacturing Industries
August 2004
Working Paper Number:
CES-04-14
This paper uses the inverse input demand function framework of Kim (1992) to test for economies of industry and urban size in two U.S. manufacturing sectors of differing technology intensity: farm and garden machinery (SIC 352) and measuring and controlling devices (SIC 382). The inverse input demand framework permits the estimation of the production function jointly with a set of cost shares without the imposition of prior economic restrictions. Tests using plant-level data suggest the presence of population scale (urbanization) economies in the moderate- to low-technology farm and garden machinery sector and industry scale (localization) economies in the higher technology measuring and controlling devices sector. The efficiency and generality of the inverse input demand approach are particularly appropriate for micro-level studies of agglomeration economies where prior assumptions regarding homogeneity and homotheticity are less appropriate.View Full Paper PDF
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Working PaperTracing the Sources of Local External Economies
August 2004
Working Paper Number:
CES-04-13
In a cross-sectional establishment-level analysis using confidential secondary data, I evaluate the influence of commonly postulated sources of localized external economies'supplier access, labor pools, and knowledge spillovers'on the productivity of two U.S. manufacturing sectors (farm and garden machinery and measuring and controlling devices). Measures incorporating different distance decay specifications provide evidence of the spatial extent of the various externality sources. Chinitz's (1961) hypothesis of the link between local industrial organization and agglomeration economies is also investigated. The results show evidence of labor pooling economies and university-linked knowledge spillovers in the case of the higher technology measuring and controlling devices sector, while access to input supplies and location near centers of applied innovation positively influence efficiency in the farm and garden machinery industry. Both sectors benefit from proximity to producer services, though primarily at a regional rather than highly localized scale.View Full Paper PDF
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