Industrial Organization Commons^™

Attenuation Of Agglomeration Economies: Evidence From The Universe Of Chinese Manufacturing Firms, Li Jing, Liyao Li, Shimeng Liu

Research Collection School Of Economics

This paper quantifies industry-specific spatial attenuation of agglomeration economies by taking advantage of unique geocoded administrative data on the universe of Chinese manufacturing firms. The estimates of industry-level attenuation speed further allow us to systematically assess the goodness of fit of various spatial decay functional forms and to evaluate the micro-foundations that govern the decay patterns across industries. We obtain three main findings. First, agglomeration spillovers attenuate by about 90 percent on average from 0-1 km to 1-5 km in China, with large heterogeneity in the extent of attenuation ranging from 73 percent to 116 percent across industries. Second, the …