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- Title
An empirical analytical framework for agglomeration economies.
- Authors
Graham, Daniel J.; Kim, H. Youn
- Abstract
This paper proposes an empirical analytical framework for agglomeration economies based on a translog production-inverse input demand system. Estimation of the system allows us to identify effects on total factor productivity (TFP), partial factor productivity, factor prices and factor demands. It also provides a decomposition of the aggregate agglomeration elasticity into returns that arise from the increased efficiency of factor inputs and a “direct” agglomeration effect which exists over and above any factor augmentation. This enables us to indirectly address the problem of unobserved heterogeneity in factor “quality”. The paper provides an empirical application of the model using firm level data for UK manufacturing and service industries.
- Subjects
UNITED Kingdom; EMPIRICAL research; INDUSTRIAL productivity; FACTORS of production; INDUSTRIES; SERVICE industries; PRODUCTION (Economic theory); PRICES; ECONOMIC demand
- Publication
Annals of Regional Science, 2008, Vol 42, Issue 2, p267
- ISSN
0570-1864
- Publication type
Article
- DOI
10.1007/s00168-007-0156-0