Agglomeration, Product Heterogeneity, and Firm Entry

Freedman, Matthew; Kosova, Renata

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Agglomeration, Product Heterogeneity, and Firm Entry

Journal of Economic Geography, 12, 2012: 601-626

34 Pages Posted: 10 Jul 2010 Last revised: 23 Apr 2021

See all articles by Matthew Freedman

Matthew Freedman

University of California, Irvine - Department of Economics

Renata Kosova

Imperial College London

Date Written: July 10, 2010

Abstract

This paper investigates the interaction between product heterogeneity and geographic agglomeration. Using data for nearly the entire population of U.S. hotels, we examine patterns of entry into different regions among establishments delineated by product segment. We find that to the extent that hotels agglomerate, they are sensitive to the composition and size distribution of other hotels in an area. Our results are consistent with countervailing competition and agglomeration effects that vary in strength across differentiated firms.

Keywords: Agglomeration, Product Differentiation, Entry, Services

JEL Classification: R30, L22, R12, L83

Suggested Citation: Suggested Citation

Freedman, Matthew and Kosova, Renata, Agglomeration, Product Heterogeneity, and Firm Entry (July 10, 2010). Journal of Economic Geography, 12, 2012: 601-626, Available at SSRN: https://ssrn.com/abstract=1638332