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Uncovering spatial productivity centers using asymmetric bidirectional spillovers

journal contribution
posted on 10.02.2020, 12:21 by Anthony Glass, Karligash Glass, Mustapha Douch
The principal contribution of this paper is to present the first method to sift through a large number of firms in an industry to uncover which firms act as large spatial total factor productivity (TFP) growth centers. We define a large spatial TFP growth center as a firm that is a large net generator of spatial TFP growth spillovers, i.e., it is a source of large TFP growth spill-outs to other firms vis-à-vis the size of the TFP growth spill-ins that permeate to the firm from other firms. We use this definition because, other things being equal, firms would want to locate near a firm that is a net generator of TFP growth spillovers. In the process of presenting the above method we make three further contributions, two of which are methodological and the other relates to our application. First, rather than follow the literature on spatial frontier modeling by considering spatial interaction between firms in a single network, we introduce a more sophisticated model that is able to account for spatial interaction in multiple networks. Second, we obtain bidirectional spatial TFP growth decompositions by complementing a unidirectional decomposition in the literature, where the spillover components are spill-ins to a firm, with a decomposition that includes spill-out components. Third, from a spatial revenue frontier for U.S. banks (1998–2015), we find a number of cases where banks that represent large spatial TFP growth centers have branches that cluster together, while in several states we find no such clusters.

History

School

  • Business and Economics

Department

  • Economics

Published in

European Journal of Operational Research

Volume

285

Issue

2

Pages

767 - 788

Publisher

Elsevier

Version

AM (Accepted Manuscript)

Rights holder

© Elsevier

Publisher statement

This paper was accepted for publication in the journal European Journal of Operational Research and the definitive published version is available at https://doi.org/10.1016/j.ejor.2020.02.007.

Acceptance date

04/02/2020

Publication date

2020-02-11

Copyright date

2020

ISSN

0377-2217

Language

en

Depositor

Dr Karligash Glass Deposit date: 9 February 2020

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