“…intercept) and as interaction effects with the covariates (slope of their relationships with the dependent variable), for which it is reasonable to assume that the impact on productivity varies along with territories and size. Our focus on territories, defined according to the classification by areas (Becattini-Coltorti, 2006), aims at verifying the impact on productivity of the economies of aggregation; the highly populated areas would offer a number of benefits, such as pooling of the labor market, proximity to local suppliers and target markets, spillover of technologies and knowledge; on the other hand, they would suffer some relevant drawbacks, such as congestion costs, higher costs of spaces, etc. The highly populated areas would also trigger selection economies (Combes, Duranton, Gobillon, Puga, & Roux, 2012): both as an ex post process, since larger markets would attract more entrants, favoring more competition and the abandonment of less efficient and competitive firms, and as an ex ante sorting process, since less efficient firms and less skilled workers would avoid the more dense and competitive areas.…”