Abstract
Identifying the impact of local firm concentration on individual firm performance is likely to produce a selection bias related to the positive effects of local concentration if agglomeration economies and natural advantages coincide. We overcome this problem by exploiting exogenous variation arising from a natural experiment. When Germany was divided after World War II, a great many firms fled the socialist East to prevent expropriation and located in random West German regions. Based on micro-level data for the population of firms in the machine tool industry from 1949 -2002, we identify the impact of relocated firms on incumbent firms’ survival. We find a negative effect on incumbent survival, suggesting that the costs of increased competition dominate the potential benefits of agglomeration.
| Item Type: | Paper |
|---|---|
| Faculties: | Economics Economics > Chairs > CESifo-Professorship for Empirical Innovation Economics |
| Subjects: | 300 Social sciences > 330 Economics |
| Language: | English |
| Item ID: | 19924 |
| Date Deposited: | 15. Apr 2014, 08:54 |
| Last Modified: | 29. Apr 2016, 09:17 |
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- From Russia with Love: The Impact of Relocated Firms on Incumbent Survival. (deposited 15. Apr 2014, 08:54) [Currently Displayed]
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