Measuring Economic Gains from Clusters

Gilles Duranton, Philippe Martin, Thierry Mayer and Florian Mayneris

in The Economics of Clusters

Published in print November 2010 | ISBN: 9780199592203
Published online January 2011 | e-ISBN: 9780191595615 | DOI:

Series: Studies of Policy Reform

Measuring Economic Gains from Clusters

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This chapter analyses empirically the effect of spatial agglomeration of activities on the productivity of firms using French individual firm data from 1996 to 2004. This allows us to control for endogeneity biases that the estimation of agglomeration economies typically encounters. In the short run, French firms benefit from localization economies, but not from urbanization economies nor from competition effects. The benefits generated by increased sectoral clustering, though positive and highly significant, are modest and geographically very limited. The gains from clusters are also quite well internalized by firms in their location choice: we find very little difference between the geography that would maximize productivity gains and the geography actually observed.

Keywords: clusters; localization economies; spatial concentration; productivity

Chapter.  11768 words.  Illustrated.

Subjects: Financial Markets

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