Transportation-Induced Agglomeration Effects and Productivity of Firms in Megacity Region of Paris Basin

Abstract

This paper undertakes empirical analysis of the relationship between productivity and transportation-induced agglomeration effects in the megacity region of the Paris Basin. The authors believe this to be the first study in the French context to produce elasticities of urban agglomeration economies for different industry sectors. Furthermore, the measure of agglomeration used by the authors explicitly took account of accessibility to economic mass in terms of driving times. This study is the first attempt to investigate the presence of nonlinearities in the relationship between productivity and agglomeration with French data. The findings indicate that transportation-induced agglomeration effects differ across industry groups and are greater for business services; these findings agree with existing evidence for other countries. The results also suggest considerable nonlinearity in the relationship between productivity and transportation-induced agglomeration effects and imply that the conventional estimation of country-level aggregate elasticities is likely to misrepresent the actual magnitude of any productivity gains from agglomeration.

The Effect of Accessibility on Productivity in Spanish Manufacturing Firms

“…Comparison of workers’ accessibility results with already existing ones, is not straightforward as they usually refer to more specific areas or they use agglomeration or market potential measurements in their analysis. Nonetheless they are much in line with previous findings, highlighting a moderate impact over TFP (Gibbons et al., 2010; Le Néchet et al., ; and Melo, Graham, Levinson, and Aarabi, ).…”

“…This is also true for the market potential indicators. Often, with regards to the transport component, these measures contemplate a disutility function based on the inverse of the geodesic distance (Graham, ; Graham and Kim, ; amongst others) or real travel distances or times along main road networks (Graham, ; Holl, ; Le Néchet et al., ; Melo, Graham, Levinson, and Aarabi, ; amongst others). Lall et al () when analyzing Indian firms, they go a step further by introducing a more complex function (negative exponential) in order to adjust for the observed utility loss.…”

“…Furthermore, the increase and improvement of connections between territories broadens firms’ markets and thus the rising of specialization and economies of scale is more likely to occur, which in turn provokes increases in competition pressure and technological diffusion. Additionally, the improvements in infrastructures generate on one hand a reduction in firms’ costs and hence productivity gains, and on the other, a change in location attractiveness which lead to more geographic concentration and thus reinforce the productivity effects associated with the economics of agglomeration (Graham, ; Venables, ; and Le Néchet, Melo, and Graham, ).…”

“…Andersson and Lööf () analyze the effect of agglomeration on Swedish firms’ productivity. Studies analyzing the effect on productivity of different market potential measures are more usual, as Graham (, ) and Graham and Kim () do for British firms, Holl () for Spain, Le Néchet et al () for France, and Lall, Shalizi, and Deichmann () for Indian firms. In fact, market potential is a measure standing between classical agglomeration variables and the ones associated with accessibility.…”

Agglomeration, accessibility and productivity: Evidence for large metropolitan areas in the US

“…To our knowledge, Lall et al (2004), Rice et al (2006), Graham (2007), Holl (2012 and Le Néchet et al (2012) are the only studies using accessibility type measures based on travel times derived from actual road networks. These studies, however, generally assume a constant rate of decline in agglomeration effects with increased distance/travel time.…”