Unusual Spatial Patterns of Industrial Firm Locations Uncover their Social Interactions

In this paper we report evidence from the Italian industrial sectors whereby firms that buy and sell are spatially distributed with a pattern that reflects the microeconomic powers at play. The main finding is that firms are neither clustered around population centers nor are they situated at random. Although geography has an important role in shaping the population map of Italy, the reasons for the positional pattern of buyers and sellers appear to be social. Geographic proximity between sellers and their buyers is supported by the excess in short-distance social ties.