Is industry location persistent over time? Evidence from coagglomeration patterns between new and incumbent firms in Germany

Oliver Falck*, Michael Fritsch, Stephan Heblich

*Corresponding author for this work

Research output: Contribution to journalArticle (Academic Journal)peer-review

Abstract

We test whether new firms locate close to incumbent firms of the same industry. Tendencies to coagglomerate may explain the general wisdom that industry location is highly persistent over time. We perform separate analysis for East and West Germany which enables us to study two integrated areas that have been characterized by different conditions in the period under study. A comparison of actual coagglomeration patterns with counterfactual patterns reveals that about 40 percent of the West German industries show coagglomeration patterns. In East Germany, coagglomeration between new and incumbent firms is prevalent in only 5 percent of the industries. The considerably lower degree of coagglomeration in East Germany may be due to a higher level of spatial reallocation within industries during the transformation from a socialist regime to a market economy.

Original languageEnglish
Pages (from-to)1-21
Number of pages21
JournalJahrbuch für Regionalwissenschaft
Volume34
Issue number1
DOIs
Publication statusPublished - 1 Jan 2014

Keywords

  • Agglomeration economies
  • Coagglomeration
  • Entrepreneurship
  • Location decision

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