Spatial and Supply/Demand Agglomeration Economies: State- and Industry-Linkages in the U.S. Food System

Posted: 8 Aug 2016

See all articles by Jeffrey Cohen

Jeffrey Cohen

University of Connecticut - School of Business

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics; National Bureau of Economic Research (NBER); University of Hartford - Barney School of Business

Date Written: 2003

Abstract

Cost-impacts of spatial and industrial spillovers on economic performance are evaluated by incorporating activity level measures for nearby states and related industries into a cost function model. We focus on localization and urbanization economies for state level food processing industries, from activity levels of similar industries in neighboring states, agricultural input suppliers, and final product demand. We find significant cost-savings from proximity to other food manufacturing centers, and areas with high purchasing power. Cost savings from locating near an agricultural area are also evident, although it seems costly to be located within a rural agricultural state, implying thin market diseconomies. Marginal production costs instead appear higher in more urban, and lower in more rural, areas. These spillover patterns also have input composition implications; materials demand responses are the most closely tracked by the agglomeration cost effects, and capital and labor impacts vary.

Keywords: spatial, costs, food, agglomeration

JEL Classification: R3

Suggested Citation

Cohen, Jeffrey and Morrison Paul, Catherine J., Spatial and Supply/Demand Agglomeration Economies: State- and Industry-Linkages in the U.S. Food System (2003). Empirical Economics, Vol. 28, No. 4, 2003, Available at SSRN: https://ssrn.com/abstract=2819614

Jeffrey Cohen (Contact Author)

University of Connecticut - School of Business ( email )

368 Fairfield Road
Storrs, CT 06269-2041
United States

Catherine J. Morrison Paul

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States
916-752-0469 (Phone)
916-752-5614 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Hartford - Barney School of Business

200 Bloomfield Ave
West Hartford, CT 06117
United States

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