.110 Localization Economies and Establishment

Department, for the permission to use the Quadros do Pessoal database. We are also indebted to Miguel Portela and João Cerejeira for their help in accessing the data. This paper reexamines the relationship between geographic concentration of an industry (localization) and establishment scale. We use an approach that builds on Ellison & Glaeser’s (1997) dartboard location model to mea-sure localization. Contrary to Holmes & Stevens’s (2002) pioneering analysis based on employment location quotients, but in line with the predictions that follow from Alfred Marshall’s concept of localization economies, we find evi-dence that plants located in areas where an industry exhibits concentration in excess are smaller than plants in the same industry outside such areas. JEL classification: R12, R39, L11.