Industrial Location at the Intra-metropolitan Level: A Negative Binomial Approach

The objective of this paper is to analyse the influence of agglomeration economies on location decisions taken by new firms inside metropolitan areas. Following the literature, we consider that agglomeration economies are related to the concentration of an industry (location economies) and/or to the size of the city itself (urbanisation economies). As we assume that these economies differ according to firms' level of technology, our sample comprises new firms from high, intermediate and low technology industries. Our results confirm these sectoral differences and show some interesting location patterns for manufacturing firms. Taking into account the renewed interest in the influence of geography and distance in the location of economic activity, we introduce in our estimation the effect of the area's central city as a determinant for the location of new firms in the rest of the metropolitan area. This allows us to determine whether a suburbanisation effect exists and whether this effect remains the same regardless of the industry involved. Our main statistical source is the REI (Spanish Industrial Establishments Register), which provides plant-level microdata for the creation and location of new industrial firms.