The Geography of Consumption

87 Pages Posted: 18 Jul 2017 Last revised: 26 Mar 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

J. Bradford Jensen

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy; Peter G. Peterson Institute for International Economics

Ferdinando Monte

Georgetown University - Robert Emmett McDonough School of Business

Multiple version iconThere are 3 versions of this paper

Date Written: July 2017

Abstract

This paper examines the interaction between consumers' willingness to travel and producers' choices for a broad range of industries that supply final consumption and account for a large fraction of employment in the United States. Using detailed credit card data, we present evidence that consumers actively manage the spatial dimension of their purchases. Further, the data exhibit considerable variation in expenditure gravity across sectors. We develop a simple theory of how a sector characteristic, the durability/storability of the sector's output, affects consumer and producer behavior. We present empirical evidence that durability/storability appears to influence local employment, producer density, and establishment size differentially across sectors in U.S. counties. Our results have implications for a broad range of issues, including the consequences of local shocks, the impact of place-based policies, and the geographic market definition in the assessment of horizontal mergers.

JEL Classification: F1, F14, L8, R1, R2

Suggested Citation

Agarwal, Sumit and Jensen, J. Bradford and Monte, Ferdinando, The Geography of Consumption (July 2017). CEPR Discussion Paper No. DP12150. Available at SSRN: https://ssrn.com/abstract=3003929

Sumit Agarwal (Contact Author)

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

J. Bradford Jensen

Georgetown University - Department of Strategy/Economics/Ethics/Public Policy ( email )

Washington, DC 20057
United States

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

Ferdinando Monte

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

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