Location Decisions of Natural Gas Extraction Establishments: A Smooth Transition Count Model Approach

41 Pages Posted: 3 May 2014

See all articles by Jason Brown

Jason Brown

Federal Reserve Bank of Kansas City

Dayton M. Lambert

University of Tennessee, Knoxville

Date Written: April 1, 2014

Abstract

The economic geography of the United States’ energy landscape changed rapidly with domestic expansion of the natural gas sector. Recent work with smooth transition parameter models is extended to an establishment location model estimated using Poisson regression to test whether expansion of this sector, as evidenced by firm location decisions from 2005 to 2010, is characterized by different growth regimes. Results suggest business establishment growth of firms engaged in natural gas extraction was faster when the average area of shale and tight gas transition coverage in neighboring counties exceeded 17%. Local agglomeration externalities, access to skilled labor and transportation infrastructure were of more economic importance to location decisions in the high growth regime. Accordingly, growth rates were heterogeneous across the lower 48 States, suggesting potentially different outcomes with respect to local investment decisions supporting this sector.

Keywords: natural gas extraction, location choice, count model, endogenous growth regimes, spatially varying parameters

JEL Classification: C21, C25, D21, R12, R30

Suggested Citation

Brown, Jason and Lambert, Dayton M., Location Decisions of Natural Gas Extraction Establishments: A Smooth Transition Count Model Approach (April 1, 2014). Federal Reserve Bank of Kansas City Working Paper No. 14-05, Available at SSRN: https://ssrn.com/abstract=2431924 or http://dx.doi.org/10.2139/ssrn.2431924

Jason Brown (Contact Author)

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

Dayton M. Lambert

University of Tennessee, Knoxville ( email )

The Boyd Center for Business and Economic Research
Knoxville, TN 37996
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
42
Abstract Views
1,032
PlumX Metrics