Evaluating the Geographic Concentration of Industries Using Distance-Based Methods

JEL classification: C40, C60, L60, R12We propose new methods for evaluating the spatial distribution of firms. To assess whether firms are concentrated or dispersed, economists have tradi-tionally used indices that analyse the heterogeneity of a spatial structure at a single geographic level. We introduce distance-based methods, Besag's L function (derived from Ripley's K function) and Diggle and Chetwynd's D function to describe simultaneously spatial distribution at different geographical scales. Our empirical applications consider the distribution of French manufacturing firms in the Paris area and in France generally. For some geographic levels, results show significant concentration or dispersion of firms according to their sector of activity