nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒03‒08
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Does Spatial Proximity Matter? Micro-evidence from Italy. By Cainelli, Giulio; Lupi, Claudio
  2. Spatial structure and mobility patterns:;towards a taxonomy of the Italian urban systems By Andrea CIRILLI; Paolo VENERI
  3. Medium-Sized Cities and the Dynamics of Creative Services By Claude LACOUR (GREThA); Sylvette PUISSANT (GREThA)
  4. Long-term growth determinants of young businesses in Germany : effects of regional concentration and specialisation By Otto, Anne; Fornahl, Dirk
  5. Can Information Asymmetry Cause Agglomeration? By Berliant, Marcus; Kung, Fan-chin
  6. Information and communication technologies and geographic concentration of manufacturing industries: evidence from China By Fu, Shihe; Hong, Junjie
  7. Regional Opportunities and Policy Initiatives for New Venture Creation By Verheul, I.; Carree, M.A.; Santarelli, E.
  8. On Measuring the Complexity of Urban Living By Hasan, Lubna
  9. Spatial Spillovers in the Development of Institutions By Harry Kelejian; Peter Murrell; Oleksandr Shepotylo
  10. Valuing access to water - a spatial hedonic approach applied to Indian cities By Lall, Somik; Deichmann, Uwe; Lozano-Gracia, Nancy; Anselin, Luc
  11. Place Marketing, Governance and Tourism Development. Or How to Design the Perfect Regional Tourist Board? By Jan van der Borg
  12. Geography vs. Institutions at the Village Level By Michael Grimm; Stephan Klasen
  13. Choice Valuation of Traffic Restrictions: Perspectives on Noise, Pollution and Congestion Preferences By Carlos Pestana Barros; Peter Dieke

  1. By: Cainelli, Giulio; Lupi, Claudio
    Abstract: The effect of spatial agglomeration (localisation and urbanisation economies) on employment growth is explored over a balanced panel of 23,374 Italian firms, using a flexible Bayesian model. Contrary to previous research, the agglomeration economies measures are calculated using direct measures of physical distances between pairs of firms, rather than with respect to pre-specified geographical units. We find that localisation effects are positive but decreasing with distance, while the variety effects are negative for distances within 10 kilometers and become positive for distances in a range of 10–30 kilometers. Our results suggest that the use of geographic units such as standard metropolitan units, LLS, administrative regions or provinces can be misleading.
    Keywords: Proximity, agglomeration, knowledge spillover, employment.
    JEL: R11 O47
    Date: 2008–02–22
  2. By: Andrea CIRILLI (Universita' Politecnica delle Marche, Dipartimento di Economia); Paolo VENERI (Universita' Politecnica delle Marche, Dipartimento di Economia)
    Abstract: Urban spatial organization has become a wide field of research in the last years, since it is thought to be an important determinant of the city's performance, from many points of view. Nevertheless, Italian urban spatial organization has not been studied in depth yet and a general description of the Italian urban territory is lacking. The aim of this work is to build a taxonomy of the Italian cities - where the latter are conceptualised as agglomeration of contiguous municipalities - on the basis of their spatial organization features and of their patterns of commuting-to-work mobility. To reach this aim, three preliminary steps had to be carried out. First of all, the major Italian urban systems have been identified following a functional approach that is based on the principle of maximum self-containment of commuters' flows, as allowed by Local Labour Systems (LLSs). Secondly, original indicators have been built to gain a better understanding of cities' spatial organization and of their patterns of mobility. Thirdly, the relation between these two dimensions has been investigated through a multivariate statistical analysis. The results of the analysis show that spatial organization - especially urban dispersion - and mobility patterns are closely related and cities might be aggregated in five groups, ranging from the most compact and transit-oriented cities to the most dispersed and car-oriented ones.
    Date: 2008–02
  3. By: Claude LACOUR (GREThA); Sylvette PUISSANT (GREThA)
    Abstract: This paper examines the development of “creative” services (research, information, art etc.), located in medium-sized areas. Insofar as urban dynamics lead to extend the advanced services outside metropolises, particular attention is given to issues concerning the definition of “medium-sized cities”, and their significance regarding urban systems; the approach in terms of creativity and metropolization clarifies the incidence of their economic contexts and their structuring role within spatial frameworks. The findings presented in this paper are based on the experiment of French cities. They precise the meanings and the limits of the urban size effect, which can play in favour of medium-sized areas growth, and to their detriment as well.
    Keywords: medium-sized cities, metropolization, services, niches, France
    JEL: J24 J44 R11 R23
    Date: 2008
  4. By: Otto, Anne (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Fornahl, Dirk
    Abstract: "This paper explores how different levels of regional concentration and specialisation affect the long-term growth of young firms. The sample consists of knowledge-intensive and non-knowledge-intensive western German manufacturing firms which were set-up in 1992 and managed to survive 11 years. The paper examines the joint effect of regional, industrial and firm-specific determinants. The analysis of the concentration and specialisation factors takes into account the industrial and technological dimensions and the regional level of human capital. With regard to the concentration measures being located in an industrial or technological agglomeration slightly reduces the growth rates of start-ups. The same negative, but stronger, effect can be observed for competition measures. Furthermore, our results suggest that startups exhibit higher growth rates the higher specialised the region is in which they are located." (author's abstract, IAB-Doku) ((en))
    JEL: R11 L25 R12 O30
    Date: 2008–03–05
  5. By: Berliant, Marcus; Kung, Fan-chin
    Abstract: The modern literature on city formation and development, for example the New Economic Geography literature, has studied the agglomeration of agents in size or mass. We investigate agglomeration in sorting or by type of worker, that implies agglomeration in size when worker populations differ by type. This kind of agglomeration can be driven by asymmetric information in the labor market, specifically when firms do not know if a particular worker is of high or low skill. In a model with two types and two regions, workers of different skill levels are offered separating contracts in equilibrium. When mobile low skill worker population rises or there is technological change that favors high skilled workers, integration of both types of workers in the same region at equilibrium becomes unstable, whereas sorting of worker types into different regions in equilibrium remains stable. The instability of integrated equilibria results from firms, in the region to which workers are perturbed, offering attractive contracts to low skill workers when there is a mixture of workers in the region of origin.
    Keywords: Adverse Selection; Agglomeration
    JEL: R13 D82 R12
    Date: 2008–03–02
  6. By: Fu, Shihe; Hong, Junjie
    Abstract: Using the 2004 China economic census database, this paper examines the impact of information and communication technologies (ICT) on the geographic concentration of manufacturing industries, controlling for other determinants of industrial agglomeration. Higher geographic concentration is found consistently in industries where ICT are more widely adopted, and the association is stronger at higher geographic levels. Furthermore, young firms that have adopted ICT, although they are more footloose, contribute to industrial agglomeration. High-tech industries with advanced ICT also tend to agglomerate. Contrary to the prevalent argument that ICT lead to more dispersion, our study suggests that ICT promote industrial agglomeration.
    Keywords: Information and communication technologies; Geographic concentration; Agglomeration; China
    JEL: R32 R12
    Date: 2008–03–01
  7. By: Verheul, I.; Carree, M.A.; Santarelli, E. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This paper investigates the determinants of new venture creation across industries and locations for 103 Italian provinces between 1997 and 2003. We allow for differences in regional opportunities across industries and investigate the impact of a range of factors on entrepreneurship in different industries: manufacturing, retailing and wholesaling, hotels and restaurants. Our results show that wage costs deter entry in manufacturing and that regions with industrial districts are characterized by higher start-up rates. Firm entry in commercial sectors appears higher in large cities and areas with strong economic progress. For hotels and restaurants we find that tourism positively influences new firm formation. In terms of policy we do not find a significant effect of recently introduced regional laws promoting new firm formation.
    Keywords: venture creation;policy initiatives;Italian provinces
    Date: 2007–12–17
  8. By: Hasan, Lubna
    Abstract: This paper explores the concept of city ranking as a way to measure dynamics and complexities of urban life. These rankings have various dimensions and uses. Both the context in which these rankings are done, and their nature has changed considerably overtime. These rankings are also afflicted with many methodological and measurement problems. A review of major city rankings and related literature is carried out to suggest a framework for measuring Pakistani cities.
    Keywords: Quality of Life; Cities; Urbanization
    JEL: R10
    Date: 2007
  9. By: Harry Kelejian; Peter Murrell (Department of Economics, University of Maryland); Oleksandr Shepotylo
    Abstract: We examine spatial spillovers between countries in the development of institutions. Our dependent variables are three measures of institutions that relate to politics, law, and governmental administration. The major explanatory variable on which we focus is a spatial lag of the dependent variable, that is, the level of similar institutions in bordering countries. We also consider long-term determinants of institutions that have been previously examined in the literature, such as legal origin, religious groupings, ethnolinguistic fractionalization, resource base, and initial level of GDP per capita. Our framework of analysis is a spatial panel data model. Because of missing observations, our panel data set is not balanced, which causes special problems in estimating spatial models. These problems are explicitly recognized in our estimation procedure, which implements new results in spatial econometrics. Spatial spill-over effects between countries are statistically significant and economically important. We provide evidence of the size of the general equilibrium effects of spatial spillovers by examining a counter-factual the non-existence of the Soviet Union. Our central conclusions are bolstered by robustness tests that involve alternative treatments of GDP per capita and the inclusion of fixed effects.
    Keywords: institutions, spatial econometrics, governance, neighborhood effects, spatial spillovers
    JEL: C5 O1 O5 P5
    Date: 2007–11
  10. By: Lall, Somik; Deichmann, Uwe; Lozano-Gracia, Nancy; Anselin, Luc
    Abstract: An important infrastructure policy issue for rapidly growing cities in developing countries is how to raise fiscal revenues to finance basic services in a fair and efficient manner. This paper applies hedonic analysis that explicitly accounts for spatial spillovers to derive the value of improved access to water in the Indian cities of Bhopal and Bangalore. The findings suggest that by looking at individual or private benefits only, the analysis may underestimate the overall social welfare from investing in service supply especially among the poorest residents. The paper further demonstrates how policy simulations based on these estimates help prioritize spatial targeting of interventions according to efficiency and equity criteria.
    Keywords: Town Water Supply and Sanitation,Housing & Human Habitats,Water Supply and Sanitation Governance and Institutions,Water and Industry,Water Use
    Date: 2008–02–01
  11. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The principal scope of this paper is to reconstruct the chain-of-command that regards the implementation of a regional tourism development strategy, in particular the tourism marketing policy. Starting point of the analysis was the assumption that the quality of the governance of these organisations is one of the factors that may explain the success of a tourist destination. Thereto, an international comparative study into the role of the organizational structure, of organizing capacity and of governance on the effectiveness of tourism promotion and territorial marketing was organised. By comparing four different case studies, Catalunya (E), Rhone-Alpes (F), Scotland (UK) and Trentino (I), worst and best practices have been identified, and an answer to the question whether there exists such a thing as an ideally structured organisation that deals with territorial and tourism marketing at the regional level has been sought.
    Keywords: Tourism Marketing, Governance, Regional Tourist Organisations, Tourism Policy
    JEL: L83 L88 M31 R11 R58
    Date: 2008
  12. By: Michael Grimm; Stephan Klasen
    Abstract: There is a well-known debate about the roles of geography versus institutions in explaining the long-term development of countries. These debates have usually been based on cross-country regressions where questions about parameter heterogeneity, unobserved heterogeneity, and endogeneity cannot easily be controlled for. The innovation of Acemoglu, Johnson and Robinson (2001) was to address this last point by using settler mortality as an instrument for geography-induced endogenous institutions and found that this supported their line of reasoning. We believe there is value-added to consider this debate at the micro level within a country as particularly questions of parameter heterogeneity and unobserved heterogeneity are likely to be smaller than between countries. Moreover, at the micro level it is possible to identify more precise transmission mechanisms from geography via institutions to economic development outcomes. In particular, we examine the determinants of economic development across villages on the Indonesian Island of Sulawesi and find that geography-induced endogenous emergence of land rights is the critical institutional link between geographic conditions and technological change. We therefore highlight and empirically validate a new transmission channel from endogenously generated institutions on economic development.
    Keywords: Geography, migration, land rights, institutions, technology adoption, agricultural development, Indonesia
    JEL: K11 O12 Q12
    Date: 2008–02–26
  13. By: Carlos Pestana Barros; Peter Dieke
    Abstract: This paper focuses on the choice valuation of traffic restrictions while entering Lisbon city based on individual preferences for noise, pollution and congestion. The analysis employs a questionnaire distributed in 2007 to ascertain the significant characteristics of traveling to Lisbon, with the aim of curbing the number of cars that enter the city daily. A random parameter logit model is used to analyze the characteristics (e.g. individual characteristics, motivations, type of transport used) that are associated with the probability of individuals supporting a fee on private cars entering the city. The model also takes into account the uncontrolled heterogeneity of the data. Some policy implications are also presented.
    Keywords: Transportation; Lisbon; Mixed Logit Model; Public Policy.
    Date: 2008–02

This nep-geo issue is ©2008 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.