The Geography of Consumption
85 Pages Posted: 25 Jul 2017
Date Written: July 2017
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.
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