Firm Sorting and Agglomeration
By Cecile Gaubert. The American Economic Review, 2018
220 citations recorded by the source corpus.
To account for the uneven distribution of economic activity in space, I propose a theory of the location choices of heterogeneous firms in a variety of sectors across cities. In equilibrium, the distribution of city sizes and the sorting patterns of firms are uniquely determined and affect aggregate TFP and welfare. I estimate the model using French firm-level data and find that nearly half of the productivity advantage of large cities is due to firm sorting, the rest coming from agglomeration economies. I quantify the general equilibrium effects of place-based policies: policies that subsidize smaller cities have negative aggregate effects. (JEL D22, D24, R11, R32)
Subfields: Economics and Econometrics
View Paper: https://www.semanticscholar.org/paper/64303a7e419d645f67af8ad764991cd1373e6fb9
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In Economics and Econometrics
Citations in the corpus
- Evaluating State and Local Business Tax Incentives (2020, background): “Moving a firm to a location to which it would not go in the absence of incentives misallocates resources (Gaubert, 2018; Fajgelbaum, Morales, Suárez Serrato and Zidar, 2018) and has fiscal costs that either raise taxes, which increase dead weight loss, or lowers government spending below optimal…”
- Place-Based Policies and Spatial Disparities across European Cities (2020, unknown): “As one example, Gaubert (2018) studies the location choice of heterogeneous firms when offered firm subsidies to locate in different size cities.”
- Optimal Spatial Policies, Geography, and Sorting* (2018, unknown): “Gaubert (2015) studies a model without trade frictions, homogeneous workers, heterogeneous firms and a complementarity between city size and firm productivity, and characterizes the optimal allocation in that setup.9 Starting with Henderson (1974), a theoretical literature in urban economics studies”
- Quantitative Spatial Economics (2017, unknown): “…differentially, the equilibrium distribution of economic activity is typically characterized by spatial sorting, in which agents of a given type endogenously self-select into locations with a particular set of characteristics (see, e.g., Davis & Dingel 2015, Gaubert 2015, Redding & Sturm 2016).”