Geographic Concentration in U.S. Manufacturing Industries: A Dartboard ApproachThis paper discusses the prevalence of Silicon Valley-style localizations of individual manufacturing industries in the United States. Several models in which firms choose locations by throwing darts at a map are used to test whether the degree of localization is greater than would be expected to arise randomly and to motivate a new index of geographic concentration. The proposed index controls for differences in the size distribution of plants and for differences in the size of the geographic areas for which data is available. As a consequence, comparisons of the degree of geographic concentration across industries can be made with more confidence. We reaffirm previous observations in finding that almost all industries are localized, although the degree of localization appears to be slight in about half of the industries in our sample. We explore the nature of agglomerative forces in describing patterns of concentration, the geographic scope of localization, and the extent to which agglomerations involve plants in similar as opposed to identical industries. |
Common terms and phrases
4-digit industries adding up constraints agglomeration agglomerative forces aggregate employment algorithm assuming average profitability Bernoulli random variable business unit chooses Cane Sugar CBP data cells Census Census of Manufactures choose locations cluster comparative advantage dataset Economics Employment Plant Herfindahl equipment estimate fabric mills Fabricated metal filling fixtures footwear foundries fraction furniture geographic areas geographic scope geographic subunits Herfindahl index Histogram identical independent index of geographic Industry Definition Industry Employment Plant industry's employment joint distribution Krugman levels of concentration levels of geographic localization location choice location decisions Location Theory mean Men's and boys metal natural advantage model NBER Working Papers Nonferrous Note Number of industries paperboard parameters Plant Herfindahl Gamma plant size distribution predicted probability procedure Proposition randomly ranges raw concentration raw geographic concentration regression result sample shares simple simulated spillover model standard deviation standard errors state-industry employments Textile topcodes total employment values variance welded Wood