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Networking off Madison Avenue

Arzaghi, Mohammed and Henderson, J. Vernon (2008) Networking off Madison Avenue. Review of Economic Studies, 75 (4). pp. 1011-1038. ISSN 0034-6527

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Identification Number: 10.1111/j.1467-937X.2008.00499.x

Abstract

This paper studies the advertising agency industry in Manhattan to infer networking benefits among agencies in close spatial proximity. We use economic census data that allow us to distinguish locations at a fine level of geographic detail, so as to infer the strong effect on productivity of having more near advertising agency neighbours. Paying close attention to identification issues, we show, however, that there is extremely rapid spatial decay in the benefits of more near neighbours, even in the close quarters of southern Manhattan, a finding that is new to the literature. This suggests that high density of similar commercial establishments is important in enhancing local productivity for those industries found in large cities, where information sharing plays a critical role. Our results indicate that the benefits of more near neighbours are largely capitalized into rents rather than wages, challenging an existing literature, which estimates wage equations alone to infer agglomeration benefits.

Item Type: Article
Official URL: http://restud.oxfordjournals.org/
Additional Information: © 2008 The Review of Economic Studies Limited
Subjects: G Geography. Anthropology. Recreation > G Geography (General)
H Social Sciences > HB Economic Theory
Sets: Departments > Geography and Environment
Collections > Economists Online
Date Deposited: 04 Dec 2014 11:45
Last Modified: 04 Dec 2014 11:45
URI: http://eprints.lse.ac.uk/id/eprint/52087

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