Non-linear externalities in firm localization

Arbeitspapier

This paper presents a model of firm localization allowing for non-linear, quadratic externalities. The model and its numerical estimation procedure manage to disentangle localization externalities from the intrinsic advantages of regions. Moreover, the introduction of a quadratic term can accommodate both more-than-linear positive feedbacks as well as congestion effects. Indeed, if the quadratic term is sufficiently negative, one location can reach the point in which the addition of an extra firm decreases the probability for that same location to further attract other firms. In this sense, the present model does not assume a priori that the localization choices of firms are characterized by positive interdependencies. Rather, the methodology allows to estimate whether or not this is actually the case.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: LEM Working Paper Series ; No. 2015/28

Classification and Topics

• Classification: Wirtschaft ; Hypothesis Testing: General ; Model Construction and Estimation ; Real Estate Markets, Spatial Production Analysis, and Firm Location: General
• Subject: Firm localization ; Externalities ; Non-linearities

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bottazzi, Giulio ; Gragnolati, Ugo ; Vanni, Fabio
• Event: Veröffentlichung
• (who): Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM)
• (where): Pisa
• (when): 2015

Further information

• Handle: http://hdl.handle.net/10419/148163
• Last update: 10.03.2025, 11:42 AM CET