The Distribution of Firm Start-Up Size across Geographic Space
30 Pages Posted: 17 Jun 2008
Date Written: June 2008
Abstract
A growing body of literature shows that geographic location plays an important role in influencing economic phenomena. Despite the renewed interest in economic geography, the existing literature on the firm size distribution (FSD) has ignored the impact of geographic location. A wave of recent studies has examined the determinants and evolution of FSD (Cabral and Mata, 2003; Angelini and Generale 2008, AER) and a component of this literature has focused on the size of the new firm start-ups. However, while the impact of firm-specific and industry-specific characteristics on size of new firms has been analyzed, the role of geographic location has been largely neglected. Using Bayesian semi-parametric geoadditive models, we estimate geographic location as a micro-determinant of firm start-up size. The estimations based on a comprehensive database of firm start-ups in India suggest that the size distribution of new firms exhibits distinct regional patterns, even after controlling for firm and industry characteristics. These residual spatial patterns are found to be attributable, to some extent, to the level of economic and financial development in the regions.
Keywords: Bayesian Methods, Developing Countries, Firm Size Distribution, Geoadditive Models, Geography, Start-Up Size
JEL Classification: L11, L60, R12
Suggested Citation: Suggested Citation
Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )
1315 East Tenth Street
Bloomington, IN 47405
United States
Do you have a job opening that you would like to promote on SSRN?
The Distribution of Firm Start-Up Size across Geographic Space
This is a CEPR Discussion Paper. CEPR charges a fee of $8.00 for this paper.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.
