Shipping Costs, Information Costs, and the Sources of Industrial Coagglomeration*

Abstract

Direct trade between establishments, coupled with costs of trading goods and information across space, has long been considered a primary determinant of industrial colocation. However, researchers have had difficulty decomposing the effects of interindustry trade into these two cost components. Using new techniques for separately estimating shipping and information costs, this paper provides an empirical framework for identifying the various sources of industrial coagglomeration among U.S. manufacturing industries. My findings suggest that both interindustry shipping costs and information costs influence metropolitan-level coagglomeration. Additional evidence points to the significant role of direct information costs in determining intraindustry agglomerations.*I wish to thank Joseph Persky, Gianmarco Ottaviano, and three anonymous referees, all of whom provided helpful comments at various stages of this research. Any errors are my own.

The Impact of Information and Communication Technology Industrial Co-Agglomeration on Carbon Productivity with the Background of the Digital Economy: Empirical Evidence from China

“…Based on industrial agglomeration theory, Steijn et al [12] and Diodato et al [13] argue that the spatial co-agglomeration of different industries is influenced by Marshall externalities (i.e., input-output linkages, skilled labor, and knowledge spillovers). In addition, other scholars Duranton and Overman [14] and Gallagher [15] suggest that mechanisms such as circular causal cumulative effects, policy intervention, transportation costs, and information costs are responsible for the formation of industrial co-agglomeration. Moreover, scholars have carried out much research on the phenomenon of industrial co-agglomeration from a spatial perspective.…”

How do trade and communication costs shape the spatial organization of firms?

“…At best, it suggest that the relationship between and varies with the type of products (see, e.g. Gallagher, 2013). The two cases where is larger or smaller than must, therefore, be discussed.…”

Local Consequences of Global Production Processes

“…In particular, Forslid and Okubo () find that the most productive firms no longer tend to agglomerate, and move to more peripheral areas because transportation costs become less important and local costs more important. Yet, a relatively understudied area is the role of transportation costs in affecting colocation, which may work to cause productive firms to coagglomerate (Gallagher, ). Note that the forces discussed in these models might also be relevant for Desmet et al () or Desmet and Rossi‐Hansberg ().…”