Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/148163 
Year of Publication: 
2015
Series/Report no.: 
LEM Working Paper Series No. 2015/28
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
Abstract: 
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.
Subjects: 
Firm localization
Externalities
Non-linearities
JEL: 
C12
C16
C51
R30
Document Type: 
Working Paper

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